Draft Rules (2nd phase) under Companies Act 2013

DRAFT RULES UNDER COMPANIES ACT, 2013

CHAPTER III

PROSPECTUS AND ALLOTMENT OF SECURITIES

Part I

Public Offer

Matters to be stated in the prospectus

3.1. For the purposes of clause (a) of sub-section (1) of section 26,

(1) pursuant to sub-clause (i), the names, addresses and contact details of ***

(2) pursuant to sub-clause (ii),

(a) dates of opening and closing of the issue shall be prominently disclosed

(b) a declaration shall be made by the Board or the Committee authorized thereof in the prospectus that the allotment letters shall be issued or application money shall be refunded within ***

(3) pursuant to sub-clause (iii),

(a) a statement shall be given by the Board of directors that all monies received out of the issue shall be transferred to a separate bank account maintained with a Scheduled Bank; and

(b) details of all utilized and unutilized monies out of the monies collected in the previous issue made by way of public offer shall be disclosed and continued to be disclosed in the balance sheet and till the time any part of the proceeds of such previous issue remains unutilized indicating the purpose for which such monies have been utilized, and the securities or other forms of financial assets in which such unutilized monies have been invested;

(4) pursuant to sub-clause (iv), following details of underwriting shall be disclosed in the prospectus ***

(5) pursuant to sub-clause (v), consent of such other persons namely ***

(6) pursuant to sub-clause (viii), the capital structure of the company and its evolution shall be presented in the following manner- *** But in any case, in addition to such disclosures, disclose the number and rates at which each of the allotments were made in the last two years prior to public offer separately indicating the allotments made for considerations other than case and the details of such considerations in each case;

(7) Pursuant to sub-clause (ix), such other particulars such as ***

(8) Pursuant to item (E) of sub-clause (xi), the information about (i) litigation outstanding against any promoter of the issuer on the date of issue of the prospectus, and (ii) any direction issued by any Government Ministry or Department, or statutory authority or body during last five years immediately preceding the year of issue of the prospectus against any promoter of the issuer, shall be disclosed in the following manner***

(9) Pursuant to sub-clause (xiii), details of directors including their appointments and remuneration, and such particulars of the nature and extent of their interests in the company shall be disclosed in the following manner ***

(10) Pursuant to sub-clause (xiv), the sources of promoters’ contribution shall be disclosed in the following manner ***

(11) Pursuant to sub-clause (xiv), the sources of promoters’ contribution shall be disclosed in the following manner *** It shall be specified if such sources include proceeds out of the sale of shares of the company and shares of its subsidiary companies previously held by each of the promoters. The disclosure for sources of promoters contribution shall also include the particulars of name, address and the amount so raised as loan, assistance etc. , if any, by promoters for making such contributions and in case of own sources, complete details thereof.

(12) Related party transactions entered during last five years immediately preceding the year of issue of prospectus as well as transactions proposed to be entered with related parties in coming future years.

(13) Summary of qualifications/adverse remarks/suggestions of auditors in the last five years immediately preceding the year of issue of prospectus and on their impact on the financial statements and financial position of the company and the corrective steps taken and proposed to be taken by the company for each of the said qualifications/adverse remarks/suggestions

(14) Details of any inquiry, inspections or investigations initiated or conducted under the Companies Act or previous companies Act in the Last five years in the case of company or all of its subsidiaries .Also if there were any prosecutions filed, pending, fines imposed, compounding of offences in the last 5 years and if so section wise details thereof for the company and all of its subsidiaries.

(15) Details of any acts of frauds against the company and if so, the action taken by the company.

3.2. For the purposes of clause (b) of sub-section (1) of section 26,

(1) Pursuant to sub-clause (i), reports by the auditors with respect to profits and losses and assets and liabilities shall also include the rates of dividends, if any, paid by the issuer in respect of each class of shares for each of the five financial years immediately preceding the year of issue of the prospectus, giving particulars of each class of shares on which such dividends have been paid and particulars of the cases in which no dividends have been paid in respect of any class of shares for any of those years; and

if no accounts have been made up in respect of any part of the period of five years ending on a date three months before the issue of the prospectus, a statement of that fact accompanied by a statement of the accounts of the issuer in respect of that part of the said period up to a date not earlier than six months of the date of issue of the prospectus indicating the profit or loss for that period and assets and liabilities position as at the end of that period together with a certificate that such accounts have been examined and found correct. The said statement may indicate the nature of provision or adjustments made or which are yet to be made.

(2) Pursuant to sub-clause (ii) and its proviso, reports relating to profits and losses for each of the five financial years or where five financial years have not expired, for each of the financial year immediately preceding the financial year of the issue of the prospectus shall:

(a) if the company has no subsidiaries, so far as regards its profits and losses, deal separately with the profits or losses of the company (distinguishing items of a non-recurring nature) for each of the five financial years immediately preceding the year of the issue of the prospectus; and

(b) if the company has subsidiaries, deal either -

(i) as a whole with the combined profits or losses of its subsidiaries, so far as they concern members of company; or

(ii) individually with the profits or losses of each subsidiary, so far as they concern members of the company; or

(iii) instead of dealing separately with the company’s profits or losses, deal as a whole with the profits or losses of the company, and, so far as they concern members of the company, with the combined profits or losses of its subsidiaries; and

(c) The mode adopted at ‘b’ above should be specified in the prospectus

(3) For the purposes of sub-clause (iii) and proviso thereof, reports made by the auditors in respect of the business of the company shall be stated in the prospectus in the manner provided in sub-rule(2).

3.3. For the purposes of clause (d) of sub-section (1) of section 26, the prospectus shall include the following matters and reports:

(1) If the proceeds, or any part of the proceeds, of the issue of the shares or debentures are or is to be applied directly or indirectly –

(a) in the purchase of any business; or

(b) in the purchase of an interest in any business and by reason of that purchase, or anything to be done in consequence thereof, or in connection therewith; the company will become entitled to an interest as respects either the capital or profits and losses or both, in such business exceeding fifty per cent, thereof; a report made by chartered accountants (who shall be named in the prospectus) upon:

(i) the profits or losses of the business for each of the five financial years immediately preceding the date of the issue of the prospectus ; and

(ii) the assets and liabilities of the business as on the last date to which the accounts of the business were made up, being a date not more than one hundred and twenty days before the date of the issue of the prospectus;

regarding the proceeds or any parts of proceeds of the issue in the purchase of any business or interest in business.

(c) In case of purchase or acquisition of any property including indirect acquisition of property for which advances have been paid to even third parties, the following disclosures shall be made-

(i) the names, addresses, descriptions and occupations ofthe vendors;

(ii) the amount paid or payable in cash, to the vendor and, where there is more than one separate vendor, or the company is a sub-purchaser, the amount so paid or payable to each vendor, specifying separately the amount, if any, paid or payable for goodwill;

(iii) the nature of the title or interest in such property proposed to be acquired by the company;

(iv) short particulars of every transaction relating to the property completed within the two preceding years, in which any vendor of the property to the company or any person who is, or was at the time of the transaction, a promoter, or a director or proposed director of the company had any interest, direct or indirect, specifying the date of transaction and the name of such promoter, director or proposed director and stating the amount payable by or to such vendor, promoter, director or proposed director in respect of the transaction.

(2)(a) If -

(i) the proceeds, or any part of the proceeds, of the issue of the shares or debentures are or is to be applied directly or indirectly in any manner resulting in the acquisition by the company of shares in any other body corporate; and

(ii) by reason of that acquisition or anything to be done in consequence thereof or in connection therewith, that body corporate will become a subsidiary of the company; a report shall be made by Chartered Accountants (who shall be named in the prospectus) upon:

(A) the profits or losses of the other body corporate for each of the five financial years immediately preceding the issue of the prospectus; and

(B) the assets and liabilities of the other body corporate as on the last date to which its accounts were made up.

(b) The said report shall:

(i) indicate how the profits or losses of the other body corporate dealt with by the report would, in respect of the shares to be acquired, have concerned members of the issuer and what allowance would have fallen to be made, in relation to assets and liabilities so dealt with for holders of other shares, if the issuer had at all material times held the shares to be acquired; and

(ii) where the other body corporate has subsidiaries, deal with the profits or losses and the assets and liabilities of the body corporate and its subsidiaries in the manner as prescribed in sub-clause (2) above.

(3) Principal terms of loan and assets charged as security: Brief terms and conditions of the term loans including re-scheduling, prepayment, penalty, default, etc. In case of initial public offer, follow-on public offer, rights issue of any securities which are governed by the SEBI, following information shall be required to be disclosed in addition to the information as prescribed under these rules ***

(4) The aggregate number of specified securities purchased or sold by the promoter group and/or by the directors of the company which is a promoter of the issuer and/or by the directors of the issuer and their relatives (as defined in sub- section (69) of section 2) within six months immediately preceding the date of filing prospectus with the Registrar of Companies shall be disclosed.

(5) A fact sheet in the following format shall be included at the beginning of the prospectus ***

Variation in terms of contracts referred to in the prospectus or objects for which prospectus was issued

3.4. (1) For the purposes of sub-section (1) of section 27, where the company has raised money from public through prospectus and still has any unutilized amount out of the money so raised, it shall not vary the terms of contracts referred to in the prospectus or objects for which prospectus was issued except by passing a special resolution and the notice of the proposed special resolution shall contain the following particulars:-

(a) Original purpose/ object of the Issue;

(b) total money raised;

(c) money utilized for the said object of the company;

(d) Percentage of proposed objects achieved;

(e) unutilized amount out of the money so raised through prospectus,

(f) particulars of the proposed variation in the terms of contracts referred to in the prospectus or objects for which prospectus was issued;

(g) Reason for seeking variation and justification for such variation;

(h) estimated financial impact of the proposed variation on the earnings and cash flow of the company;

(i) Proposed time limit within which the proposed varied objects would be achieved

(j) Clause wise details as specified in rule 3.1(7) as was required with respect to the originally proposed objects of the issue

(k) Opportunity cost of financial loss to shareholders due to loss in time value of money vis a vis the original objects

(l) Risk factors pertaining to the new Objects

(m) other relevant information which is necessary for the members to take an informed decision on the proposed resolution;

(2) For the purposes of first proviso to sub-section (1) of section 27, the advertisement giving details of notice in respect of resolution for varying the terms of any contract referred to in the prospectus or altering the objects for which the prospectus was issued, shall be in Form No. 3.1.Such advertisement shall be published simultaneously with dispatch of Postal Ballot Notices to Shareholders.

(3) The notice shall also be placed on the web-site of the company, if any.

(4) Such variation to the proposed objects to the issue may be made not more than one time with respect to money raised in any particular public issue offer.

Offer of Sale by Members

3.5. (1) The provisions of Part I of Chapter III and rules made there under shall be applicable to offer of sale referred to in section 28 except the following-

(a) provisions relating to minimum subscription;

(b) provisions for minimum application value;

(c) provisions requiring any statement to be made by the Board of directors in respect of the utilization of money; and

(d) any other provision, information about which cannot be gathered by the offeror, with detailed justifications thereof, of not complying with such provisions

(2) In the case of offer for sale, the dividend for the entire year shall be payable to the transferees.

(3) The prospectus issued under section 28 shall disclose the name of the entity bearing the cost of making the offer for sale along with reasons.

Dematerialisation of securities

3.6.(a) For the purposes of section 29, the entire holding of the promoters of every public company making a public offer of any security shall be held only in dematerialised form:

Provided that the entire holding of the promoters in the securities of the company held in physical form up to the initial public offer shall be converted in dematerialized form before such issue and thereafter such promoter shareholding shall only be held in dematerialized form.

(b) Any issue of securities by a listed company should be made only in dematerialised form.

Shelf prospectus

3.7 For the purposes of sub-section (2) of section 31, the information memorandum shall be prepared in Form No. 3.2 and filed with the Registrar along with the fee as provided in Annexure ‘B’ within one month prior to the issue of a second or subsequent offer of securities under the shelf prospectus.

Refund of Application Money

3.8 (1) For the purposes of sub-section (3) of section 39, if the stated minimum amount has not been subscribed and the sum payable on application is not received with the period specified therein, then the application money shall forthwith be repaid within a period of *** if any such money is not so repaid within such specified period, the directors of the company shall jointly and severally be liable to repay that money with interest at the rate of ***

(2) The application money to be refunded shall, either by way of cheque/ demand draft or any other banking channels, be credited only to the bank account of the subscriber.

Return of Allotment

3.9. For the purposes of sub-section (4) of section 39,

(i) Whenever a company having a share capital makes any allotment of its securities, the company shall, within thirty days thereafter, file with the Registrar a return of allotment in Form No.3.3, along with the fee as specified in Annexure ‘B’

(ii) There shall be attached to the Form No.3.3 a list of allottees stating their names, address, occupation, if any, and number of securities allotted to each of the allottees. The list shall be certified by the signatory of the Form No. 3.3 to be complete and correct as per the records of the company.

(iii) In the case of securities (not being bonus shares) allotted as fully or partly paid up for consideration other than cash, there shall be attached to the Form No.3.3 the contract, being duly stamped, in writing constituting the title of the allottee to the allotment together with any contract of sale, or a contract for services or other consideration in respect of which that allotment was made.

(iv) Where a contract such as is mentioned in sub-rule (iii) is not reduced to writing, the company shall attach to the Form No.3.3 complete particulars of the contract stamped with the same stamp duty as would have been payable if the contract had been reduced to writing and those particulars shall be deemed to be an instrument within the meaning of the Indian Stamp Act, 1899 (2 of 1899), and the Registrar may, as a condition of filing the particulars, require that the stamp duty payable thereon be adjudicated under section 31 of the Indian Stamp Act, 1899.

(v) A report of a registered valuer in respect of valuation of the consideration other than cash shall also be attached along with the contract as mentioned in sub-rule (iii) and (iv).

(vi) In the case of issue of bonus shares, a copy of the resolution authorizing the issue of such shares shall be attached to the Form No. 3.3.

(vii) In case the shares have been issued in pursuance of clause (c) of sub-section (1) of section 62, there shall be attached to Form No.3.3, the valuation report of the registered valuer.

Payment of commission

3.10. For the purposes of sub-section (6) of section 40, a company may pay commission to any person in connection with the subscription or with the procurement of subscription to its securities, whether absolute or conditional, subject to the following conditions:

(a) the payment of such commission should be authorized in the company’s articles of association;

(b) the commission may be paid out of proceeds of the issue or profit or both;

(c) the rate of commission paid or agreed to be paid shall not exceed, in case of shares,*** percentage of the price at which the shares are issued or rate authorized by articles whichever is less and in case of debentures, shall not exceed two and a half per cent of the price at which the debentures are issued, or as specified in the company’s articles, whichever is less.

(d) the prospectus of the company shall disclose the following:

(i) name of the underwriters;

(ii) the rate and amount of the commission payable to the underwriter; and

(iii) the number of the shares or debentures which is to be subscribed by the underwriter absolutely or conditionally.

(e) No commission shall be paid to any underwriter on shares or debentures which are not offered to the public for subscription.

(f) a copy of the contract for the payment of the commission is delivered to the Registrar at the time of delivery of the prospectus for registration.

Global Depository Receipts

3.11 (1) For the purposes of section 41, following rules shall apply to the issuance of Global Depository Receipts

Definitions – For the purposes of rule 3.11, unless the context otherwise requires, ___

(i) “Scheme” means the Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository Receipt Mechanism) Scheme, 1993 or any modification or re-enactment thereof;

(ii) Words and expressions occurring in these rules shall bear the same meaning as in the Act and the Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository Receipt Mechanism) Scheme, 1993 or any modification or re-enactment thereof.

(2) Eligibility to issue depository receipts

(a) A company may issue depository receipts provided it is eligible to do so in terms of the Scheme and relevant provisions of Foreign Exchange Management Rules and Regulations.

(b) The authorized share capital of the company shall be sufficient for the company to issue new shares underlying depository receipts at the time of conversion of such receipts.

(3) Conditions for issue of depository receipts

(a) The Board of Directors of the company intending to issue depository receipts shall pass a resolution authorizing the company to do so.

(b) The company shall take prior approval of its shareholders by a special resolution to be passed at a general meeting or by postal ballot.

(c) Depository receipts shall be issued by an overseas depository bank appointed by the company and the underlying shares shall be kept in the custody of a domestic custodian bank.

(d) The company shall ensure that all the applicable provisions of the Scheme and the rules or regulations or guidelines issued by the Reserve Bank of India are complied with before and after the issue of depository receipts.

(e) The company shall appoint a merchant banker or a practicing chartered accountant or a practicing cost accountant or a practicing company secretary to oversee all the compliances relating to issue of depository receipts and the compliance report taken from such merchant banker or practicing chartered accountant or practicing cost accountant or practicing company secretary, as the case may be, shall be placed at the meeting of the Board of Directors of the company to be held immediately after closure of all formalities of the issue of depository receipts.

(4) Manner and form of depository receipts

(a) Depository receipts can be issued by way of public offering or private placement or in any other manner prevalent abroad and may be listed or traded in an overseas listing or trading platform.

(b) The depository receipts may be issued against issue of new shares or may be sponsored against shares held by shareholders of the

company in accordance with such conditions as the Government and / or Reserve Bank of India may specify from time to time.

(c) The underlying shares shall be allotted in the name of the overseas depository bank and against such shares, the depository receipts shall be issued by the overseas depository bank abroad.

(5) Voting rights

(a) A holder of depository receipts may become a member of the company and shall be entitled to vote as such only on conversion of the depository receipts into underlying shares after following the procedure provided in the Scheme and the provisions of this Act.

(b) Until the conversion of depository receipts, the overseas depository shall be entitled to vote on behalf of the holders of depository receipts in accordance with the provisions of the agreement entered into between the depository, holders of depository receipts and the company in this regard.

(6) Proceeds of issue

The proceeds of issues shall either be brought back to India or deposited in an Indian Bank operating abroad or any foreign bank of repute having operations in India with an agreement that the foreign bank having operations in India shall take responsibilities for furnishing all the information which may be required.

(7) Non applicability of certain provisions of the Act

(1) The provisions of the Act and any rules issued thereunder insofar as they relate to public issue of shares or debentures shall not apply to issue of depository receipts abroad.

(2) The offer document, by whatever name called and if prepared for the issue of depository receipts, shall not be a prospectus or an offer document within the meaning of this Act and all the provisions as applicable to a prospectus or an offer document shall have no application to a depository receipts offer document.

(3) Notwithstanding anything contained under section 88 of the Act, until the redemption of depository receipts, the name of the overseas depository bank shall be entered in the Register of Members of the company.

Part II- Private Placement

3.12 (1)(a) For the purposes of sub-section (1) of section 42, a company may make an offer or invitation of securities through issue of a private placement offer letter in Form No. 3.4.

(b) A private placement offer letter shall be accompanied by an application form addressed specifically to the person to whom the offer is made and shall be sent to him, either in writing or in electronic mode, within thirty days of recording the names of such persons in accordance with sub-section (7) of section 42:

Provided that no person other than the person so addressed in the application form shall be allowed to apply through such application form and any application not so received shall be treated as invalid.

(2) For the purposes of sub-section (2) of section 42, a company shall not make private placement unless:

(a) the proposed offer of securities or invitation to subscribe securities has been approved by the shareholders of the Company, by way of a Special Resolution, for each of the Offers/ Invitations;

(b) such offer or invitation shall be made to not more than two hundred persons in the aggregate in a financial year, excluding the qualified institutional buyers and employees of the company being offered securities under a scheme of employees stock option as per provisions of clause (b) of sub-section (1) of section 62;

Provided that any allottee under such offer/invitation shall not transfer his/its securities to more than 20 persons during a quarter and the company shall not register any transfer which is not in conformity with this requirement.

(c) the number of such offers or invitations shall not exceed four in a financial year and not more than once in a calendar quarter with a minimum gap of sixty days between any two such offers or invitations; and

(d) the value of such offer or invitation shall be with an investment size of not less than fifty thousand rupees per person.

(e) the payment to be made on subscription of securities shall be made from the bank account of the person subscribing to such securities:

Provided that monies payable on subscription to securities to be held by joint holders shall be paid from the bank account of the person whose name appears first in the application.

(3) For the purposes of sub-section (7) of section 42, the company shall maintain a complete record of private placement offers and acceptances of such offers in Form No. 3.5:

Provided that a copy of such record along with the private placement offer letter in Form No. 3.3 shall be filed with the Registrar with fee as provided in Annexure ‘B’ and with the Securities and Exchange Board, where the company is listed, within a period of thirty days of circulation of the private placement offer letter.

(4) For the purposes of sub-section (9) of section 42, a return of allotment of securities under section 42 shall be filed with the Registrar in Form No. 3.3 and with the fee as provided in Annexure ‘B’ along with a complete list of all security holders containing-

(i) full name, address, PAN No., and E-mail id of such security holders;

(ii) class of security held;

(iii) date of becoming security holder;

(iv) number of securities held; nominal value and amount paid up on such securities; and particulars of consideration received.

(5) The provisions of this rule shall not be applicable to any non-banking financial company which is registered with the Reserve Bank of India under RBI Act, 1934.

Foot note:*** to be provided/included after receipt of comments from SEBI.

 

DRAFT RULES UNDER COMPANIES ACT, 2013

CHAPTER-IV

SHARE CAPITAL AND DEBENTURES

4.1 The provisions of this chapter shall apply to all unlisted companies and to listed companies so far as they do not contradict or conflict with any other provision framed in this regard by the Securities and Exchange Board.

Explanation: For the purposes of this Chapter, “Board” means the Board of directors of the company or a committee thereof consisting of not less than two directors, majority of whom shall be other than the Managing or Whole Time Directors, if the composition of the Board permits it.

Equity shares with differential rights.

4.2.(1) For the purposes of sub-clause (ii) of clause (a) of section 43, no company limited by shares shall issue equity shares with differential rights as to dividend, voting or otherwise, unless it complies with the following conditions:

(a) the articles of association of the company authorizes the issue of shares with differential rights;

(b) the issue of shares is authorized by a special resolution passed at a general meeting of the shareholders:

Provided that where the equity shares of a company are listed on a recognized stock exchange, the issue of such shares shall be approved by the shareholders through postal ballot or a poll at a general meeting;

(c) the shares with differential rights shall not exceed twenty-five percent of the total post-issue paid up equity share capital including equity shares with differential rights issued at any point of time;

(d) the company has a track record of dividend payment of at least 10% for the last three financial years immediately preceding the financial year in which it is decided to issue such shares;

(e) the company has not defaulted in filing financial statements and annual returns for five financial years immediately preceding the financial year in which it is decided to issue such shares;

(f) the company has no subsisting default in the payment of a declared dividend to its shareholders or repayment of its matured deposits or redemption of its preference shares or debentures that have become due for redemption or payment of interest on such deposits or preference shares or debentures or repayment of any term loan from a public financial institution or State level financial institution or scheduled Bank that has become repayable or interest payable thereon or dues with respect to statutory payments relating to its employees to any authority;

(g) the company has not been convicted of any offence under Reserve Bank of India Act, 1934 , Securities and Exchange Board of India Act, 1992, Securities Contract Regulation Act, 1956, Foreign Exchange Management Act, 1999 or any other special Act.

(2) The explanatory statement to be annexed to the notice of the general meeting to be convened pursuant to section 102 or of a postal ballot pursuant to section 110 shall contain the following particulars:

(a) total number of shares to be issued with differential rights;

(b) details of the differential rights ;

(c) percentage of the proposed issue of shares to the total post issue paid up equity share capital;

(d) the reasons/justification for the issue;

(e) price at which such shares are proposed to be issued;

(f) basis on which the price has been arrived at;

(g) (i) in case of private placement or preferential issue ;

(a) details of total number of shares proposed to be allotted to promoters, directors and key managerial personnel;

(b) details of total number of shares proposed to be allotted to persons other than promoters, directors and key managerial personnel and their relationship, if any, with any promoter, director or key managerial personnel;

(ii) in case of public issue - reservation, if any, for different classes of applicants including promoters, directors or key managerial personnel;

(h) Percentage of voting right which the equity share capital with differential voting right shall carry to the total voting right of the aggregate equity share capital;

(i) scale or proportion in which the voting rights of such class or type of shares will vary;

(j) change in control, if any, in the company that may occur consequent to the issue of equity shares with differential voting rights;

(k) diluted Earning Per Share pursuant to the issue of such shares, calculated in accordance with the applicable accounting standards.

(l) Pre and post issue shareholding pattern along with voting rights in the following format:

Sr. No.	Category	Pre Issue			Post Issue
		No. of Shares held	% of share holding	% of voting rights	No. of shares held	%of share holding	% of voting rights
A	Promoters’ holding :
1	Indian :
	Individual
	Bodies Corporate
2	Foreign Promoters
	Sub Total (A)
B	Non-Promoters’ holding :
1.	Institutional Investors
2.	Non-Institution :
	Private Corporate Bodies
	Directors & Relatives
	Indian Public
	Others (Including NRIs)
	Sub Total(B)
	GRAND TOTAL

 

(3) The company shall not convert its existing equity share capital with voting rights into equity share capital carrying differential voting rights and vice–versa.

(4) The Board of Directors shall, inter alia, disclose in the Board’s Report for the financial year in which the issue of equity shares with differential rights was completed, the following details:

(a) total number of shares allotted with differential rights;

(b) details of the differential rights relating to voting rights and dividends;

(c) percentage of the issue of shares with differential rights to the total post issue equity capital and percentage of voting right which the equity share capital with differential voting right shall carry to the total voting right of the aggregate equity share capital;

(d) price at which such shares have been issued;

(e) particulars of promoters, directors or key managerial personnel to whom such shares are issued;

(f) change in control, if any, in the company consequent to the issue of equity shares with differential voting rights;

(g) diluted Earning Per Share pursuant to the issue of such shares, calculated in accordance with the applicable accounting standards.

(h) pre and post issue shareholding pattern along with voting rights in the format specified under rule 4.2 (2)(l).

5) The holders of the equity shares with differential rights shall enjoy all other rights such as bonus shares, rights shares etc., which the holders of equity shares are entitled to, subject to the differential rights with which such shares have been issued.

(6) Where a company issues equity shares with differential rights, the Register of Members maintained under section 88 shall contain all the relevant particulars of the shares so issued along-with details of the shareholders.

Certificate of shares (where shares are not in demat form).

4.3. (1) For the purposes of sub-section (3) of section 46, where a company issues any share capital, no certificate of any share or shares held in the company shall be issued, except:

(a) in pursuance of a resolution passed by the Board; and

(b) on surrender to the company of the letter of allotment or fractional coupons of requisite value, save in cases of issues against letters of acceptance or of renunciation, or in cases of issue of bonus shares:

Provided that if the letter of allotment is lost or destroyed, the Board may impose such reasonable terms, if any, as to seek supporting evidence and indemnity and the payment of out-of-pocket expenses incurred by the company in investigating evidence, as it may think fit.

(2) Every certificate of share or shares shall be in Form No. 4.1 or as near thereto as possible and shall specify the name(s) of the person(s) in whose favor the certificate is issued, the shares to which it relates and the amount paid-up thereon.

(3) Every share certificate shall be issued under the seal of the company, which shall be affixed in the presence of, and signed by:

(a) two directors duly authorized by the Board of Directors of the company for the purpose; and

(b) the secretary or any person authorized by the Board for the purpose;

Provided that, in companies wherein a Company Secretary is appointed under the provisions of law, he shall be authorized for the purpose of this rule.

Provided that, if the composition of the Board permits of it, at least one of the aforesaid two directors shall be a person other than the managing or whole-time director:

Provided further that, in case of a One Person Company, every share certificate shall be issued under the seal of the company, which shall be affixed in the presence of and signed by one director or a person authorized by the Board of Directors of the company for the purpose and the Secretary, or any other person authorized by the Board for the purpose.

Explanation: For the purposes of this sub-rule, a director shall be deemed to have signed the share certificate if his signature is printed thereon as a facsimile signature by means of any machine, equipment or other mechanical means such as engraving in metal or lithography, or digitally signed, but not by means of a rubber stamp, provided that the director shall be personally responsible for permitting the affixation of his signature thus and the safe custody of any machine, equipment or other material used for the purpose.

(4) Particulars of every share certificate issued in accordance with sub-rule (1) shall be entered in the Register of Members maintained in accordance with section 88 along with the name(s) of person(s) to whom it has been issued, indicating the date of issue.

Issue of renewed or duplicate share certificate

4.4 (1) No certificate of any share or shares shall be issued either in exchange for those which are sub-divided or consolidated or in replacement of those which are defaced, mutilated, torn or old, decrepit, worn out, or where the cages on the reverse for recording transfers have been duly utilized, unless the certificate in lieu of which it is issued is surrendered to the company:

Provided that the company may charge such fee as the Board thinks fit, not exceeding twenty rupees per certificate issued on splitting or consolidation of share certificate(s) or in replacement of share certificate(s) that are defaced, mutilated, torn or old, decrepit or worn out:

Provided further that where a certificate is issued in any of the circumstances specified in this sub-rule, it shall be stated on the face of it and be recorded in the Register maintained for the purpose, that it is “Issued in lieu of share certificate No..... sub-divided/replaced/on consolidation”.

Provided further that a company may replace all the existing certificates by new certificates upon sub-division or consolidation of shares or merger or demerger or any reconstitution without requiring old certificates to be surrendered subject to compliance with Rule 4.3(1)(a), 4.3(2) and 4.3(3) of these Rules.

(2) No duplicate share certificate shall be issued in lieu of those that are lost or destroyed, without the prior consent of the Board or without payment of such fees as the Board thinks fit, not exceeding rupees fifty per certificate and on such reasonable terms, such as furnishing supporting evidence and indemnity and the payment of out-of-pocket expenses incurred by the company in investigating the evidence produced;

Provided that where a certificate is issued in any of the circumstances specified in this sub-rule, it shall be stated prominently on the face of it and be recorded in the Register maintained for the purpose, that it is “duplicate issued in lieu of share certificate No......”. Further, the word “duplicate” shall be stamped or printed prominently on the face of the share certificate.

Further provided that the Duplicate Share Certificates shall be issued within a period of three months of submission of complete documents and details with the Company.

(3)(a) Particulars of every share certificate issued in accordance with sub-rules (1) and (2) shall be entered forthwith in a Register of Renewed and Duplicate Share Certificates maintained in Form No. 4.2 indicating against the name(s) of the person(s) to whom the certificate is issued, the number and date of issue of the share certificate in lieu of which the new certificate is issued, and the necessary changes indicated in the Register of Members by suitable cross-references in the “Remarks” column.

(b) Such register shall be kept at the registered office of the company or at such other place where the Register of Members is kept. The register shall be preserved permanently and shall be kept in the custody of the secretary of the company or any other person authorized by the Board for the purpose.

(c) All entries made in the Register of Renewed and Duplicate Share Certificates shall be authenticated by the secretary or such other person as may be authorized by the Board for purposes of sealing and signing the share certificate under the provisions of sub-rule (3) of rule 4.2.

Maintenance of share certificate forms and related books and documents

4.5. (1) All blank forms to be used for issue of share certificates shall be printed and the printing shall be done only on the authority of a resolution of the Board. The blank form shall be consecutively machine-numbered and the forms and the blocks, engravings, facsimiles and hues relating to the printing of such forms shall be kept in the custody of the secretary or such other person as the Board may authorize for the purpose; and the secretary or other person aforesaid shall be responsible for rendering an account of these forms to the Board.

(2) The following persons shall be responsible for the maintenance, preservation and safe custody of all books and documents relating to the issue of share certificates, including the blank forms of share certificates referred to in sub-rule (1), namely:—

(a) where the company has a company secretary, the company secretary; and

(b) where the company has no company secretary, a Director specifically authorized by the Board for such purpose.

(3) All books referred to in sub-rule (2) shall be preserved in good order permanently, and all certificates surrendered to a company shall immediately be defaced by stamping or printing the word “cancelled” in bold letters and may be destroyed after the expiry of three years from the date on which they are surrendered, under the authority of a resolution of the Board and in the presence of a person duly appointed by the Board in this behalf:

Provided that nothing in this sub-rule shall apply to cancellation of the certificates of securities, under sub-section (2) of section 6 of the Depositories Act, 1996 (22 of 1996), when such certificates are cancelled in accordance with sub-regulation (5) of regulation 54 of the Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996, made under section 30 of the Securities and Exchange Board of India Act, 1992 (15 of 1992) read with section 25 of the Depositories Act, 1996 (22 of 1996).

Issue of sweat equity shares.

4.6.(1) For the purposes of sub-section (1) of section 54, a company other than a listed company, which is not required to comply with SEBI regulations on sweat equity shall not issue sweat equity shares to its directors or employees at a discount or for consideration other than cash, for their providing know-how or making available rights in the nature of intellectual property rights or value additions, by whatever name called, unless the issue is authorized by a special resolution passed by the company in general meeting.

Explanation I: For the purposes of section 54 and this rule,

(i) ‘Employee’ means-

(a) a permanent employee of the company who has been working in India or outside India, for at least the last one year; or

(b) a director of the company, whether a whole time director or not; or

(c) an employee or a director as defined in sub-clauses (a) or (b) above of a subsidiary, in India or outside India, or of a holding company of the company.

(ii) ‘Value additions’ means actual or anticipated economic benefits derived or to be derived by the company from an expert and/or a professional for providing know-how or making available rights in the nature of intellectual property rights, by such person to whom sweat equity is being issued for which the consideration is not paid or included in-

(a) the normal remuneration payable under the contract of employment, in the case of an employee; and/or

(b) monetary consideration payable under any other contract, in the case of non-employee.

(2) The explanatory statement to be annexed to the notice of the general meeting pursuant to section 102 shall contain the following particulars:

(a) the date of the Board meeting at which the proposal for issue of sweat equity shares was approved;

(b) the reasons/justification for the issue;

(c) the class of shares under which sweat equity shares are intended to be issued;

(d) the total number of shares to be issued as sweat equity;

(e) the class or classes of directors or employees to whom such equity shares are to be issued;

(f) Principal terms and conditions on which sweat equity shares are to be issued, including basis of valuation ;

(g) Time period of association of such person with the company;

(h) the names of the directors or employees to whom the sweat equity shares will be issued and their relationship with the promoter or/and Key Managerial Personnel;

(i) the price at which the sweat equity shares are proposed to be issued;

(j) the consideration including consideration other than cash, if any to be received for the sweat equity;

(k) would the ceiling on managerial remuneration, if any, be breached by issuance of such sweat equity and how is it proposed to be dealt with;

(l) a statement to the effect that the company shall conform to the applicable accounting standards; and

(m) diluted Earning Per Share pursuant to the issue of sweat equity securities, calculated in accordance with the applicable accounting standards.

(3) The special resolution authorizing the issue of sweat equity shares shall be valid for making the allotment within a period of not more than twelve months from the date of passing of the special resolution.

(4) The company shall not issue sweat equity shares for more than 15% of the existing paid up equity share capital in a year or shares of the issue value of rupees five crores, whichever is higher.

Provided further that the issuance of sweat equity shares in the Company shall not exceed 25% of the paid up equity capital of the Company at any time.

(5) Sweat equity shares issued to directors or employees shall be locked in/non transferable for a period of three years from the date of allotment. The fact that the share certificates are under lock-in and the period of expiry of lock in shall be stamped in bold or mentioned in any other prominent manner on the share certificate.

(6) The sweat equity shares to be issued shall be valued at a price determined by a registered valuer as the fair price giving justification for such valuation.

(7) The valuation of intellectual property rights or of know how or value additions for which sweat equity shares are to be issued, shall be carried out by a registered valuer, who shall provide a proper report addressed to the Board of directors with justification for such valuation.

(8) A copy of the valuation report obtained under clause (7) and (8) shall be sent to the share holders with the notice of the general meeting;

(9) Where sweat equity shares are issued for a non-cash consideration on the basis of a valuation report in respect thereof obtained from the registered valuer, such non-cash consideration shall be treated in the following manner in the books of account of the company:

(a) where the non-cash consideration takes the form of a depreciable or amortizable asset, it shall be carried to the balance sheet of the company in accordance with the accounting standards; or

(b) where clause (a) is not applicable, it shall be expensed off as provided in the accounting standards.

(10) The amount of sweat equity shares issued shall be treated as part of managerial remuneration for the purposes of sections 197 and 198 of the Act if the following conditions are fulfilled:

(a) the sweat equity shares are issued to any director or manager; and

(b) they are issued for consideration other than cash, which does not take the form of an asset which can be carried to the balance sheet of the company in accordance with the applicable accounting standards.

(11) In respect of sweat equity shares issued during an accounting period, the accounting value of sweat equity shares shall be treated as a form of compensation to the employee or the director in the financial statements of the company.

(12) The Board of Directors shall, inter alia, disclose in the Directors’ Report for the year in which such shares are issued, the following details of issue of sweat equity shares:

(a) Class of director/ employee to whom sweat equity shares were issued;

(b) Class of shares issued as Sweat Shares;

(c) number of sweat equity shares issued to the directors, their relatives, key managerial personnel or other employees showing separately the number of such shares issued to them , if any, for consideration other than cash and the individual names of allottees holding 1% or more of the issued share capital ;

(d) the reasons/justification for the issue;

(e) Principal terms and conditions for issue of sweat equity shares, including pricing formula;

(f) the total number of shares arising as a result of issue of sweat equity shares;

(g) percentage of the sweat equity shares of the total post issued and paid up share capital;

(h) consideration (including consideration other than cash) received or benefit accrued to the company from the issue of sweat equity shares;

(i) diluted Earnings Per Share (EPS) pursuant to issuance of sweat equity shares.

(13)(a) The company shall maintain a Register of Sweat Equity Shares in Form No. 4.3 and shall forthwith enter therein the particulars of Sweat Equity Shares issued under section 54.

(b) The Register of Sweat Equity Shares shall be maintained at the registered office of the company or such other place as the Board may decide.

(c) Entries in the register shall be authenticated by the Secretary of the company or by any other person authorized by the Board for the purpose.

Issue and redemption of preference shares.

4.7.(1) For the purposes of sub-section (2) of section 55, a company having a share capital may, if so authorized by its articles, issue preference shares subject to the following conditions:

(a) the issue of such shares has been authorized by passing a special resolution in the general meeting of the company;

(b) the company, at the time of such issue of preference shares, has no subsisting default in the redemption of preference shares issued either before or after the commencement of this Act or in payment of dividend due on any preference shares ;

(2) A company issuing preference shares shall set out in the articles of association, the regulations in respect of the following matters relating to such shares:

(a) priority with respect to payment of dividend or repayment of capital vis-a-vis equity shares;

(b) participation in surplus dividend;

(c) participation in surplus assets and profits, on winding-up which may remain after the entire capital has been repaid;

(d) payment of dividend on cumulative or non-cumulative basis.

(e) conversion of preference shares into equity shares.

(f) voting rights;

(g) redemption of preference shares.

(3) The explanatory statement to be annexed to the notice of the general meeting pursuant to section 102 shall inter-alia provide the complete material facts concerned with and relevant to the issue of such shares, including:

(a) size of the issue and number of preference shares to be issued and nominal value of each share;

(b) nature of such shares i.e. cumulative or non - cumulative, participating or non - participating , convertible or non - convertible

(c) objectives of the issue;

(d) manner of issue of shares;

(e) price at which such shares are proposed to be issued;

(f) basis on which the price has been arrived at;

(g) terms of issue, including terms and rate of dividend on each share, premium etc.;

(h) terms of conversion, if convertible;

(i) terms of redemption, including the tenure of redemption, redemption of shares at premium and if the preference shares are convertible, the terms of conversion;

(j) manner and modes of redemption;

(k) current shareholding pattern of the company;

(l) expected dilution in equity share capital upon conversion of preference shares.

(4) Where a company issues preference shares, the Register of Members maintained under section 88 shall contain the particulars in respect of such preference share holder(s).

(5) A company intending to list its preference shares on a recognized stock exchange shall issue such shares in accordance with the regulations made by the Securities and Exchange Board of India in this behalf.

(6) A company may redeem its preference shares only on the terms on which they were issued or as varied after due approval of preference shareholders under section 48 of the Act. The preference shares may be redeemed:

(a) at a fixed time or on the happening of a particular event;

(b) any time at the company’s option; or

(c) any time at the shareholder’s option.

Issue and redemption of preference shares by company in infrastructural projects.

4.8. For the purposes of first proviso to sub-section (2) of section 55, a company engaged in the setting up of infrastructure projects may issue preference shares for a period exceeding twenty years but not exceeding thirty years, subject to the redemption of a minimum 10% of such preference shares per year from the twenty first year onwards or earlier, on proportionate basis, at the option of the preference shareholders.

Instrument of transfer.

4.9.(1) For the purposes of sub-section (1) of section 56, an instrument of transfer of securities held in physical form shall be in Form No. 4.4 and every instrument of transfer with the date of its execution specified thereon shall be delivered to the company within sixty days from the date of such execution.

(2) In the case of a company having no share capital, provisions of sub-rule (1) shall apply as if the references therein to securities were references instead to the interest of the member in the company.

(3) For the purposes of sub section (3) of section 56, a company shall not register a transfer of partly paid shares, unless the company has given a notice in Form No. 4.5 to the transferee and the transferee has given no objection to the transfer within two weeks from the date of receipt of notice.

Issue of employee stock options.

4.10. For the purposes of clause (b) of sub-section (1) of section 62, a company, other than a listed company which is not required to comply with SEBI ESOP Guidelines shall not offer shares to its employees under a scheme of employees’ stock option (hereinafter referred to as “ESOS”), unless it complies with the following requirements :

(1) The issue of ESOS has been approved by the shareholders of the company by passing a special resolution.

Explanation: For the purposes of clause (b) of sub-section (1) of section 62 and this rule ‘Employee’ means-

(a) a permanent employee of the company who has been working in India or outside India; or

(b) a director of the company, whether a whole time director or not; or

(c) an employee as defined in sub-clauses (a) or (b) above of a subsidiary, in India or outside India, or of a holding company of the company or of an associate company but does not include-

(a) an employee who is a promoter or a person belonging to the promoter group; or

(b) a director who either himself or through his relative or through anybody corporate, directly or indirectly, holds more than 10% of the outstanding equity shares of the company.

(2) The company shall make the following disclosures in the explanatory statement annexed to the notice for passing of the resolution:

(a) the total number of stock options to be granted;

(b) identification of classes of employees entitled to participate in the ESOS;

(c) the appraisal process for determining the eligibility of employees to the ESOS;

(d) requirements of vesting and period of vesting;

(e) maximum period within which the options shall be vested;

(f) exercise price and the formula for arriving at the same;

(g) exercise period and process of exercise;

(h) Lock-in period, if any ;

(i) maximum number of options to be granted per employee and in aggregate;

(j) the method which the company shall use to value its options;

(k) the conditions under which option vested in employees may lapse e.g. in case of termination of employment for misconduct;

(l) the specified time period within which the employee shall exercise the vested options in the event of a proposed termination of employment or resignation of employee; and

(m) a statement to the effect that the company shall comply with the applicable accounting policies.

(3) The companies granting option to its employees pursuant to ESOS will have the freedom to determine the exercise price in conformity with the applicable accounting policies, if any.

(4) Approval of shareholders by way of separate resolution shall be obtained by the company in case of:

(a) grant of option to employees of subsidiary or holding company; or

(b) grant of option to identified employees, during any one year, equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the company at the time of grant of option.

(5)(a) The company may by special resolution, vary the terms of ESOS not yet exercised by the employees provided such variation is not prejudicial to the interests of the option holders.

(b) The notice for passing special resolution for variation of terms of ESOS shall disclose full details of the variation, the rationale therefor, and the details of the employees who are beneficiaries of such variation.

(6)(a) There shall be a minimum period of one year between the grant of options and vesting of option:

Provided that in a case where options are granted by a company under its ESOS in lieu of options held by the same person under an ESOS in another company, which has merged or amalgamated with the first mentioned company, the period during which the options granted by the transferor company were held by him shall be adjusted against the minimum vesting period required under this clause.

(b) The company shall have the freedom to specify the lock-in period for the shares issued pursuant to exercise of option.

(c) The Employees shall not have right to receive any dividend or to vote or in any manner enjoy the benefits of a shareholder in respect of option granted to them, till shares are issued on exercise of option.

(7) The amount, if any, payable by the employees, at the time of grant of option:-

(a) may be forfeited by the company if the option is not exercised by the employees within the exercise period; or

(b) the amount may be refunded to the employees if the options are not vested due to non-fulfillment of conditions relating to vesting of option as per the ESOS.

(8)(a) Option granted to employees shall not be transferable to any other person.

(b) The option granted to the employees shall not be pledged, hypothecated, mortgaged or otherwise encumbered or alienated in any other manner.

(c) Subject to clause (d) below, no person other than the employees to whom the option is granted shall be entitled to exercise the option.

(d) In the event of the death of employee while in employment, all the options granted to him till such date shall vest in the legal heirs or nominees of the deceased employee.

(e) In case the employee suffers a permanent incapacity while in employment, all the options granted to him as on the date of permanent incapacitation, shall vest in him on that day.

(f) In the event of resignation or termination of employment, all options not vested in the employee as on that day shall expire. However, the employee can exercise the options granted to him within the period specified in this behalf.

(9) The Board of directors, shall, inter alia, disclose in the Directors’ Report, the following details of the ESOS:

(a) options granted;

(b) options vested;

(c) options exercised;

(d) the total number of shares arising as a result of exercise of option;

(e) options lapsed;

(f) the exercise price;

(g) variation of terms of options;

(h) money realized by exercise of options;

(i) total number of options in force;

(j) employee wise details of options granted to;-

(i) key managerial personnel;

(ii) any other employee who receives a grant in any one year of option amounting to 5% or more of option granted during that year.

(iii) identified employees who were granted option, during any one year, equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the company at the time of grant;

(10) (a) The company shall maintain a Register of Employee Stock Options in Form No. 4.6 and shall forthwith enter therein the particulars of option granted under clause (b) of sub-section (1) of section 62.

(b) The Register of Employee Stock Options shall be maintained at the registered office of the company or such other place as the Board may decide.

(c) Entries in the register shall be authenticated by the Secretary of the company or by any other person authorized by the Board for the purpose.

(11) Where the equity shares of the company are listed on a recognised stock exchange, the ESOS shall be issued, in accordance with the regulations made by the Securities and Exchange Board in this behalf.

Issue of shares on preferential basis.

4.11.(1) For the purposes of clause (c) of sub-section (1) of section 62, if authorized by a special resolution passed in a general meeting, shares may be issued by any company in any manner whatsoever including by way of a preferential offer, to any persons whether or not those persons include the persons referred to in clause (a) or clause (b) of sub-section (1) of section 62. Such issue on preferential basis should also comply with conditions laid down in section 42 of the Act:

Provided that the price of shares to be issued on a preferential basis by a listed company shall not be required to be determined by the valuation report of a registered valuer.

Explanation (i) : ‘Preferential Offer’ means an issue of shares or other securities, by a company to any select person or group of persons on a preferential basis and does not include shares or other securities offered through a public issue, rights issue, employee stock option scheme, employee stock purchase scheme or an issue of sweat equity shares or bonus shares or depository receipts issued in a country outside India or foreign securities:

(ii) For the purpose of this rule, “shares or other securities” means equity shares, fully convertible debentures, partly convertible debentures or any other securities, which would be convertible into or exchanged with equity shares at a later date.

(2) Where the preferential offer of shares or other securities is made by a company whose share or other securities are listed on a recognized stock exchange, such preferential offer shall be made in accordance with the provisions of the Act and regulations

made by the Securities and Exchange Board, and if they are not listed, the preferential offer shall be made in accordance with the provisions of the Act and rules made hereunder and subject to compliance with the following requirements:-

(a) the issue is authorized by its articles of association;

(b) the issue has been authorized by a special resolution of the members;

(c) securities allotted by way of preferential offer shall be made fully paid up at the time of their allotment.

(d) The company shall make the following disclosures in the explanatory statement to be annexed to the notice of the general meeting pursuant to section 102 of the Act:

(i) the objects of the issue;

(ii) the total number of shares or other securities to be issued;

(iii) the price/price band at/within which the allotment is proposed;

(iv) basis on which the price has been arrived at along with report of the registered valuer;

(v) relevant date with reference to which the price has been arrived at;

(vi) the class or classes of persons to whom the allotment is proposed to be made;

(vii) intention of promoters, directors or key managerial personnel to subscribe to the offer;

(viii) the shareholding pattern of the company before and after the allotment of securities under the preferential offer;

(ix) the proposed time within which the allotment shall be completed;

(x) the names of the proposed allottees and the percentage of post preferential offer capital that may be held by them;

(xi) change in control, if any, in the company that would occur consequent to the preferential offer;

(xii) number of persons to whom allotment on preferential basis have already been made during the year, in terms of number of securities as well as price;

(xiii) justification for the allotment proposed to be made for consideration other than cash together with valuation report of the registered valuer.

(xiv) Pre issue and post issue shareholding pattern of the company in the following format :

Sr. No.	Category	Pre Issue		Post Issue
		No. of Shares held	% of share holding	No. of shares held	% of share holding
A	Promoters’ holding :
1	Indian :
	Individual
	Bodies Corporate
	Sub Total
2	Foreign Promoters
	Sub Total (A)
B	Non-Promoters’ holding :
1.	Institutional Investors
2.	Non-Institution :
	Private Corporate Bodies
	Directors & Relatives
	Indian Public
	Others (Including NRIs)
	Sub Total(B)
	GRAND TOTAL

 

(e) The allotment of securities on a preferential basis made pursuant to the special resolution passed pursuant to sub-rule (2)(b) above shall be completed within a period of twelve months from the date of passing of the special resolution.

(f) If the allotment of securities is not completed within twelve months from the date of passing of the special resolution, another special resolution shall be passed for the company to complete such allotment thereafter.

(g) The price of the shares or other securities to be issued on a preferential basis, either for cash or for consideration other than cash, shall be determined on the basis of valuation report of a registered valuer.

(h) Where convertible securities are offered on a preferential basis with an option to apply for and get equity shares allotted, the price of the resultant shares shall be determined beforehand on the basis of a valuation report of a registered valuer and also complied with the provisions of section 62 of the Act.

(i) Where shares or other securities are to be allotted for consideration other than cash, the valuation of such consideration shall be done by a registered valuer who shall submit a valuation report to the company giving justification for the valuation.

(j) Where the preferential offer of shares is made for a non-cash consideration, such non-cash consideration shall be treated in the following manner in the books of account of the company:

(i) Where the non-cash consideration takes the form of a depreciable or amortizable asset, it shall be carried to the balance sheet of the company in accordance with the accounting standards; or

(ii) Where clause (i) is not applicable, it shall be expensed off as provided in the accounting standards.

Issue of Bonus Shares

4.12 For the purpose of clause (f) of sub-section (2) of section 63, no company which has once announced the decision of its Board recommending a bonus issue, can subsequently withdraw the same.

Notice to Registrar for alteration of share capital.

4.13. For the purposes of sub-section (1) of section 64, where a company alters its share capital in any manner specified in sub-section (1) of section 61, or an order is passed by the Government increasing the authorized capital of the company in pursuance of sub-section (4) read with sub-section (6) of section 62 or a company redeems any redeemable preference shares, the notice of such alteration, increase or redemption shall be filed by the company with the Registrar in Form No. 4.7 along with the fee as specified in Annexure ‘C’.

Provision of money by company for purchase of its own shares by employees or by trustees for the benefit of employees.

4.14.(1) For the purposes of clause (b) of sub-section (3) of section 67, no company shall make a provision of/provide money for the purchase of, or subscription for, shares in the company or its holding company, if the purchase of, or the subscription for, the shares by trustees is for the shares to be held by or for the benefit of the employees of the company, unless it complies with the following conditions:

(a) the scheme of provision of money for purchase of or subscription for the shares as aforesaid is approved by the members by passing special resolution in a general meeting;

(b) such purchase of shares shall be made only through a recognized stock exchange in case the shares of the company are listed and not by way of private offers or arrangements;

(c) where shares of a company are not listed on a recognized stock exchange, the valuation at which shares are to be purchased shall be made by a registered valuer;

(d) the value of shares to be purchased or subscribed in the aggregate together with the money provided by the company shall not exceed five per cent. of the aggregate of paid up capital and free reserves of the company;

(2) The explanatory statement to be annexed to the notice of the general meeting to be convened pursuant to section 102 shall, in addition to the particulars mentioned in rule 4.16(1), contain the following particulars:

(a) class of employees for whose benefit the scheme is being implemented and money is being provided for purchase of or subscription to shares;

(b) particulars of the trustee or employees in whose favor such shares are to be registered;

(c) particulars of trust and name, address, occupation and nationality of trustees and their relationship with the promoters, directors or key managerial personnel, if any;

(d) any interest of key managerial personnel, directors or promoters in such scheme or trust and effect thereof;

(e) detailed particulars of benefits which will accrue to the employees from the implementation of the scheme;

(f) details about who would exercise and how the voting rights in respect of the shares to be purchased or subscribed under the scheme would be exercised;

(3) No person shall be appointed as a trustee to hold such shares, if he-

(a) is a director, key managerial personnel or promoter of the company or its holding, subsidiary or associate

company or any relative of such director, key managerial personnel or promoter; or

(b) beneficially holds ten percent or more of the paid-up share capital of the company;

(4) For the purposes of proviso to sub-section (3) of section 67, where the voting rights are not exercised directly by the employees in respect of shares to which the scheme relates, the Board of Directors shall, inter alia, disclose in the Board’s report for the relevant financial year the following details:

(a) names of the employees who have not exercised the voting rights directly;

(b) reasons for not voting directly;

(c) name of the person who is exercising such voting rights;

(d) number of shares held by or in favour of, such employees and the percentage of such shares to the total paid up capital of the company;

(e) date of the general meeting in which such voting power was exercised;

(f) resolutions on which votes have been cast by persons holding such voting power;

(g) percentage of such voting power to the total voting power on each resolution;

(h) whether the votes were cast in favour of or against the resolution.

Buy-back of shares or other securities.

4.15. Unless stated otherwise the following rules shall be complied with by private companies and unlisted public companies for buy-back of their securities in pursuance of clause (g) of sub-section (2) of section 68:-

(1) For the purposes of passing a special resolution under clause (b) of sub-section (2) of section 68, the explanatory statement to be annexed to the notice of the general meeting pursuant to section 102 shall contain the following disclosures:

(a) the date of the board meeting at which the proposal for buy-back was approved by the board of directors of the company;

(b) the objective of the buy-back;

(c) the class of shares or other securities intended to be purchased under the buy-back;

(d) the number of securities that the company proposes to buy-back;

(e) the method to be adopted for the buy-back;

(f) the price at which the buy-back of shares or other securities shall be made;

(g) the basis of arriving at the buy-back price;

(h) the maximum amount to be paid for the buy-back and the sources of funds from which the buy-back would be financed

(i) the time-limit for the completion of buy-back;

(j) (i) the aggregate shareholding of the promoters and of the directors of the promoter, where the promoter is

a company and of the directors and key managerial personnel as on the date of the notice convening the general meeting;

(ii) the aggregate number of equity shares purchased or sold by persons mentioned in (i) above during a period of twelve months preceding the date of the board meeting at which the buy-back was approved and from that date till the date of notice convening the general meeting;

(iii) the maximum and minimum price at which purchases and sales referred to in (ii) above were made along with the relevant date;

(k) if the persons mentioned in sub-clause (i) of clause (j) intend to tender their shares for buy-back –

(i) the quantum of shares proposed to be tendered;

(ii) the details of their transactions and their holdings for the last twelve months prior to the date of the board meeting at which the buy-back was approved including information of number of shares acquired, the price and the date of acquisition.

(l) a confirmation that there are no defaults subsisting in repayment of deposits, interest payment thereon, redemption of debentures or payment of interest thereon or redemption of preference shares or payment of dividend due to any shareholder, or repayment of any term loans or interest payable thereon to any financial institution or banking company;

(m) a confirmation that the Board of directors have made a full enquiry into the affairs and prospects of the company and that they have formed the opinion-

(i) that immediately following the date on which the general meeting is convened there will be no grounds on which the company could be found unable to pay its debts;

(ii) as regards its prospects for the year immediately following that date, that, having regard to their intentions with respect to the management of the company’s business during that year and to the amount and character of the financial resources which will in their view be available to the company during that year, the company will be able to meet its liabilities as and when they fall due and will not be rendered insolvent within a period of one year from that date; and

(iii) in forming their opinion for the above purposes, the directors have taken into account the liabilities(including prospective and contingent liabilities); as if the company were being wound up under the provisions of the Companies Act, 2013

(n) a report addressed to the Board of directors by the company’s auditors stating that:

(i) they have inquired into the company’s state of affairs;

(ii) the amount of the permissible capital payment for the securities in question is in their view properly determined;

(iii) that the audited accounts on the basis of which calculation with reference to buy back is done is not more than six months old from the date of offer document, and

(iv) the Board of directors have formed the opinion as specified in clause (m) on reasonable grounds and that the company, having regard to its state of affairs, will not be rendered insolvent within a period of one year from that date;

(2) The company which has been authorized by a special resolution shall, before the buy-back of shares, file with the Registrar of Companies a letter of offer in Form No. 4.8, along with the fee as specified in Annexure ‘B ’:

Provided that such letter of offer shall be dated and signed on behalf of the Board of directors of the company by not less than two directors of the company, one of whom shall be the managing director, where there is one.

(3) For the purposes of sub-section (6) of section 68, the company shall file with the Registrar, along with the letter of offer, and in case of a listed company with the Registrar and the Securities and Exchange Board, a declaration of solvency in Form No. 4.9 along with the fee as specified in Annexure ‘ B‘ and signed by at least two directors of the company, one of whom shall be the managing director, if any, and verified by an affidavit as specified in the said Form.

(4) The letter of offer shall be dispatched to the shareholders or security holders immediately after filing the same with the Registrar of Companies but not later than 21 days from its filing with the Registrar of Companies.

(5) The offer for buy-back shall remain open for a period of not less than 15 days and not exceeding 30 days from the date of dispatch of the letter of offer.

(6) In case the number of shares or other specified securities offered by the shareholders or security holders is more than the total number of shares or securities to be bought back by the company, the acceptance per shareholder shall be on proportionate basis out of the total shares offered for being bought back.

(7) The company shall complete the verifications of the offers received within 15 days from the date of closure of the offer and the shares or other securities lodged shall be deemed to be accepted unless a communication of rejection is made within 21 days from the date of closure of the offer.

(8) The company shall immediately after the date of closure of the offer, open a separate bank account and deposit therein, such sum, as would make up the entire sum due and payable as consideration for the shares tendered for buy-back in terms of these rules.

(9) The company shall within seven days of the time specified in sub-rule (7):

(a) make payment of consideration in cash to those shareholders or security holders whose securities have been accepted, or

(b) return the share certificates to the shareholders or security holders whose securities have not been accepted at all or the balance of securities in case of part acceptance .

(10) The company shall ensure that—

(a) the letter of offer shall contain true, factual and material information and shall not contain any misleading information and must state that the directors of the company accept the responsibility for the information contained in such document;

(b) the company shall not issue any new shares including by way of bonus shares from the date of passing of special resolution authorizing the buy-back till the date of the closure of the offer under these rules, except those arising out of any outstanding convertible instruments;

(c) the company shall confirm in its offer the opening of a separate bank account adequately funded for this purpose and to pay the consideration only by way of cash;

(d) the company shall not withdraw the offer once it has announced the offer to the shareholders;

(e) the company shall not utilize any money borrowed from banks or financial institutions for the purpose of buying back its shares; and

(f) the company shall not utilize the proceeds of an earlier issue of the same kind of shares or same kind of other specified securities for the buy-back.

(12)(a) For the purposes of sub-section (9) of section 68, the company, shall maintain a register of shares or other securities which have been bought-back in Form No. 4.10.

(b) The register of shares or securities bought-back shall be maintained at the registered office of the company and shall be kept in the custody of the secretary of the company or any other person authorized by the board in this behalf.

(c) Entries in the register shall be authenticated by the secretary of the company or by any other person authorized by the Board for the purpose.

(13) For the purposes of sub-section (10) of section 68, the company, after the completion of the buy-back under these rules, shall file with the Registrar, and in case of a listed company with the Registrar and the Securities and Exchange Board, a return in the Form No. 4.11 along with the fee as specified in Annexure ‘B ’.

(14) There shall be annexed to the return filed with the Registrar in Form No. 4.14, a certificate in Form No. 4.15 signed by two directors of the company including the managing director, if any, certifying that the buy-back of securities has been made in compliance with the provisions of the Act and rules made thereunder.

Debentures

4.16.(1) For the purposes of sub-section (3) of section 71, no company shall issue secured debentures unless it complies with the following conditions:

(a) An issue of secured debentures may be made, provided the date of its redemption shall not exceed 10 years from the date of issue.

Provided that a company engaged in the setting up of infrastructure projects may issue secured debentures for a period exceeding ten years but not exceeding thirty years;

(b) such an issue of debentures shall be secured by the creation of a charge, on the properties or assets of the company, having a value which is sufficient for the due repayment of the amount of debentures and interest thereon;

(c) the company shall appoint a debenture trustee before the issue of prospectus or letter of offer for subscription of its debentures and not later than 60 days after the allotment of the debentures, execute a debenture trust deed to protect the interest of the debenture holders ; and

(d) security for the debentures by way of a charge or mortgage shall be created in favour of the debenture trustee on-

(i) any specific movable property of the company (not being in the nature of pledge), and/or

(ii) any specific immovable property wherever situate, or any interest therein.

(2) The company shall appoint debenture trustees under sub-section (5) of section 71, after complying with the following conditions:

(a) The names of the debenture trustees shall be stated in the prospectus or letter of offer inviting subscription for debentures and also in all the subsequent notices or other communications sent to the debenture holders.

(b) Before the appointment of debenture trustee or trustees, a written consent shall be obtained from such debenture trustee or trustees proposed to be appointed and a statement to that effect shall appear in the prospectus or letter of offer issued for inviting the subscription of the debentures.

(c) No person shall be appointed as a debenture trustee, if he-

(i) beneficially holds shares in the company;

(ii) is a promoter, director or key managerial personnel or any other officer or an employee of the company or its holding, subsidiary or associate company;

(iii) is beneficially entitled to moneys which are to be paid by the company otherwise than as remuneration payable to the debenture trustee;

(iv) is indebted to the company, or its subsidiary or its holding or associate company or a subsidiary of such holding company;

(v) has furnished any guarantee in respect of the principal debts secured by the debentures or interest thereon;

(vi) has any pecuniary relationship with the company amounting to two per cent. or more of its gross turnover or total income or fifty lakh rupees or such higher amount as may be prescribed, whichever is lower, during the two immediately preceding financial years or during the current financial year;

(vii) is relative of any promoter or any person who is in the employment of the company as a director or key managerial personnel

(d) The Board may fill any casual vacancy in the office of the trustee but while any such vacancy continues, the remaining trustee or trustees, if any, may act:

Provided that where such vacancy is caused by the resignation of the debenture trustee, the vacancy shall only be filled with the written consent of the majority of the debenture holders.

(e)Any debenture trustee may be removed from office before the expiry of his term only if it is approved by the holders of not less than three fourth in value of the debentures outstanding, at their meeting.

(3) For the purposes of sub-section (6) of section 71, it shall be the duty of every debenture trustee to-

(a) satisfy himself that the prospectus or letter of offer does not contain any matter which is inconsistent with the terms of the issue of debentures or with the trust deed;

(b) satisfy himself that the covenants in the trust deed are not prejudicial to the interest of the debenture holders;

(c) call for periodical status/performance reports from the company;

(d) communicate promptly to the debenture holders defaults, if any, with regard to payment of interest or redemption of debentures and action taken by the trustee therefor;

(e) appoint a nominee director on the Board of the company in the event of:

(i) two consecutive defaults in payment of interest to the debenture holders; or

(ii) default in creation of security for debentures; or

(iii) default in redemption of debentures.

(f) ensure that the company does not commit any breach of the terms of issue of debentures or covenants of the trust deed and take such reasonable steps as may be necessary to remedy any such breach;

(g) inform the debenture holders immediately of any breach of the terms of issue of debentures or covenants of the trust deed;

(h) ensure the implementation of the conditions regarding creation of security for the debentures, if any, and debenture redemption reserve;

(i) ensure that the assets of the company issuing debentures and of the guarantors, if any, are sufficient to discharge the interest and principal amount at all times and that such assets are free from any other encumbrances except those which are specifically agreed to by the debenture holders;

(j) do such acts as are necessary in the event the security becomes enforceable;

(k) call for reports on the utilization of funds raised by the issue of debentures;

(l) take steps to convene a meeting of the holders of debentures as and when such meeting is required to be held.

(m) ensure that the debentures have been converted or redeemed in accordance with the terms of the issue of debentures;

(n) perform such acts as are necessary for the protection of the interest of the debenture holders and do all other acts as are necessary in order to resolve the grievances of the debenture holders.

(4) The meeting of all the debenture holders shall be convened by the debenture trustee on-

(a) requisition in writing signed by debenture holders holding at least one-tenth in value of the debentures for the time being outstanding;

(b) the happening of any event, which constitutes a breach, default or which in the opinion of the debenture trustees affects the interest of the debenture holders.

(5) For the purposes of sub-section (13) of section 71 and sub-rule (1) hereinabove, a trust deed in Form No. 4.12 or as near thereto as possible shall be executed by the company issuing debentures in favor of the debenture trustees within three months of the closure of the issue in case of public issue of debentures or within sixty days of allotment of debentures in other cases.

(6) The company shall create a Debenture Redemption Reserve for the purpose of redemption of debentures, in accordance with the conditions given below:

(a) Debenture Redemption Reserve shall be created out of the profits of the company available for payment of dividend;

(b) Company shall create Debenture Redemption Reserve equivalent to at least 50% of the amount raised through the debenture issue before debenture redemption commences.

(c) Every company required to create Debenture Redemption Reserve shall on or before the 30th day of April in each year, invest or deposit, as the case may be, a sum which shall not be less than fifteen percent of the amount of its debentures maturing during the year ending on 31st day of March of the next year, in any one or more of the following methods:-

(i) In deposits with any scheduled bank, free from any charge or lien;

(ii) In unencumbered securities of the Central Government or of any State Government;

(iii) In unencumbered securities mentioned in sub-clauses (a) to (d) and (ee) of Section 20 of the Indian Trusts Act, 1882;

(iv) In unencumbered bonds issued by any other company which is notified under sub-clause (f) of Section 20 of the Indian Trusts Act, 1882

The amount invested or deposited as above shall not be used for any purpose other than for redemption of debentures maturing during the year referred above, provided that the amount remaining invested or deposited, as the case may be, shall not at any time fall below fifteen percent of the amount of the debentures maturing during the year ending on 31st day of March of that year.

(d) In case of partly convertible debentures, Debenture Redemption Reserve shall be created in respect of non-convertible portion of debenture issue in accordance with this sub-rule.

(e) The amount credited to the Debenture Redemption Reserve shall not be utilized by the company except for the purpose of redemption of debentures.

(7) (a) A trust deed for securing any issue of debentures shall be open for inspection to any member or debenture holder of the company, in the same manner, to the same extent and

on the payment of the same fees, as if it were the register of members of the company; and

(b) A copy of the trust deed shall be forwarded to any member or debenture holder of the company, at his request, within seven days of the making thereof, on payment of fee as specified in Annexure ‘B’.

Nomination by securities holders.

4.17.(1) For the purposes of sub-sections (1) and (2) of section 72, any holder of securities of a company may, at any time, nominate, in Form No. 4.13, any person as his nominee in whom the securities shall vest in the event of his death.

(2) On the receipt of the nomination form, a corresponding entry shall forthwith be made in the relevant register of securities holders, maintained under section 88.

(3) Where the nomination is made in respect of the securities held by more than one person jointly, all joint holders shall together nominate in Form No. 4.13 any person as nominee.

(4) The request for nomination should be recorded by the Company within a period of two months from the date of receipt of the duly filled and signed nomination form.

(5) In the event of death of the holder of securities or where the shares or debentures are held by more than one person jointly, in the event of death of all the joint holders, the person nominated as the nominee may upon the production of such evidence as may be required by the Board, elect, either-

(a) to register himself as holder of the shares or debentures ; or

(b) to transfer the shares or debentures, as the deceased holder could have done.

(6) If the person being a nominee, so becoming entitled, elects to be registered as holder of the securities himself, he shall deliver or send to the company a notice in writing signed by him stating that he so elects and such notice shall be accompanied with the death certificate of the deceased share or debenture holder(s).

(7) All the limitations, restrictions and provisions of the Act relating to the right to transfer and the registration of transfers of securities shall be applicable to any such notice or transfer as aforesaid as if the death of the share or debenture holder had not occurred and the notice or transfer were a transfer signed by that shareholder or debenture holder, as the case may be.

(8) A person, being a nominee, becoming entitled to any securities by reason of the death of the holder shall be entitled to the same dividends or interests and other advantages to which he would have been entitled to if he were the registered holder of the securities except that he shall not, before being registered as a holder in respect of such securities, be entitled in respect of these securities to exercise any right conferred by the membership in relation to meetings of the company:

Provided that the Board may, at any time, give notice requiring any such person to elect either to be registered himself or to transfer the securities, and if the notice is not complied with within ninety days, the Board may thereafter withhold payment of all dividends or interests, bonuses or other moneys payable in respect of the securities, as the case may be, until the requirements of the notice have been complied with.

(9) For the purposes of sub-section (3) of section 72, a nomination may be cancelled, or varied by nominating any other person in place of the present nominee, by the holder of securities who has made the nomination, by giving a notice of such cancellation or variation, to the company in Form No. 4.14. The cancellation or variation shall take effect from the date on which the notice of such variation or cancellation is received by the company.

(10) For the purposes of sub-section (4) of section 72, where the nominee is a minor, the holder of the shares or debentures, making the nomination, may appoint a person in Form No. 4.17 prescribed under sub-rule (1), who shall become entitled to the securities of the company, in the event of death of the nominee during his minority.

 

DRAFT RULES UNDER COMPANIES ACT, 2013

Chapter VII

Management and Administration

Register of members.

7.1 (1) For the purposes of clause (a) of sub-section (1) of section 88, every company shall, from the date of its registration, keep and maintain a register of its members in one or more books in Form No. 7.1.

(2) In the case of a company not having share capital, the register of members shall contain the following particulars in respect of each member-

(a) Name of the member; address (registered office address in case the member is a body corporate); e-mail address; Permanent Account Number or CIN; Unique Identification Number, if any; Father’s/Mother’s/Spouse’s name; Occupation; Status; Nationality; in case member is a minor, name of the guardian and the date of birth of the member; name and address of nominee;

(b) Date of becoming member;

(c) Date of cessation;

(d) Amount of guarantee, if any;

(e) Instructions, if any, given by the member with regard to sending of notices etc.

Register of debenture holders or any other security holders.

7.2. For the purposes of clauses (b) and (c) of sub-section (1) of section 88, every company which issues or allots debentures or any other security shall maintain a separate register of debenture holders or security holders, as the case may be, for each type of debentures or other securities in one or more books in Form No.7.2.

Maintenance of the Register of members etc. under section 88.

7.3. For the purposes of sub-section (1) of section 88, every company shall maintain the registers under clauses (a), (b) and (c) in the following manner:-

(1) Entries in the registers maintained under section 88 shall be made simultaneously after the Board of Directors or its duly constituted committee approves the allotment or transfer of shares, debentures or any other securities, as the case may be.

(2) Such registers shall be maintained at the registered office of the company unless a special resolution is passed in a general meeting authorizing the keeping of the register at any other place within the city, town or village in which the registered office is situate or any other place in India in which more than one-tenth of the total members entered in the register of members reside.

(3) If shares, debentures or other securities are held with a depository, the name, particulars of the depository and number of shares, debentures or other securities so held shall be entered in the respective register.

(4) Consequent upon any forfeiture, buy-back, reduction, sub-division, consolidation or cancellation of shares, issue of sweat equity shares or issue of duplicate or new share certificates or new debenture or other security certificates, entry shall be made simultaneously in the register of members or in the respective registers, as the case may be.

(5) If any change occurs in the status of a member or debenture holder or any other security holder whether due to death or insolvency or change of name or due to any other reason, entries thereof explaining the change shall be made in the respective register.

(6) If any rectification is made in the register maintained under section 88 by the company pursuant to any order passed by the competent authority under the Act, the necessary reference of such order shall be indicated in the respective register.

(7) If any order is passed by any judicial or revenue authority attaching the shares, debentures or other securities and giving directions for remittance of dividend or interest, the necessary reference of such order shall be indicated in the respective register.

Index of names to be included in Register.

7.4 (1) Every register maintained under sub-section (1) of section 88 shall include an index of the names entered in the respective registers. The index shall, in respect of each folio, contain sufficient indication to enable the entries relating to that folio in the register to be readily found.

(2) The company shall make the necessary entries in the index simultaneously with the allotment or transfer of any security in such Register.

Foreign register of members, debenture holders, other security holders or beneficial owners residing outside India.

7.5. (1) For the purpose of sub-section (4) of section 88, a company which has share capital or which has issued debentures or any other security may, if so authorized by its articles, keep in any country outside India a part of the register of members or as the case may be, of debenture holders or of any other security holders or of beneficial owners, resident in that country (in this rule called a "foreign register").

(2) The company shall, within thirty days from the date of the opening of any foreign register, file with the Registrar notice of the situation of the office in Form No. 7.3 along with the fee as provided in Annexure ‘B’ where such register is kept; and in the event of any change in the situation of such office or of its discontinuance, shall, within thirty days from the date of such change or

discontinuance, as the case may be, file notice in Form No. 7.3 with the Registrar of such change or discontinuance.

(3) A foreign register shall be deemed to be part of the company's register (in this rule called the "principal register") of members or of debenture holders or of any other security holders or beneficial owners, as the case may be.

(4) The foreign register shall be maintained in the same format as the Principal Register.

(5) A foreign register shall be open to inspection and may be closed, and extracts may be taken there from and copies thereof may be required, in the same manner, mutatis mutandis, as is applicable to the principal register, except that the advertisement before closing the register shall be inserted in at least two newspapers circulating in the place wherein the foreign register is kept.

(6) If a foreign register is kept by a company in any country outside India, the decision of the Tribunal in regard to the rectification of the register shall be binding.

(7) The company shall—

(a) transmit to its registered office in India a copy of every entry in any foreign register within fifteen days after the entry is made; and

(b) keep at such office a duplicate register of every foreign register duly entered up from time to time.

(8) Every such duplicate register shall, for all the purposes of this Act, be deemed to be part of the principal register.

(9) Subject to the provisions of section 88 and the rules made thereunder, with respect to duplicate registers, the shares or as the case may be, debentures or any other security, registered in

any foreign register shall be distinguished from the shares or as the case may be, debentures or any other security, registered in the principal register and in every other foreign register; and no transaction with respect to any shares or as the case may be, debentures or any other security, registered in a foreign register shall, during the continuance of that registration, be registered in any other register.

(10) The company may discontinue the keeping of any foreign register; and thereupon all entries in that register shall be transferred to some other foreign register kept by the company in the same part of the world or to the principal register.

Authentication.

7.6 (1) Entries in the registers maintained under section 88 and index included therein shall be authenticated by the company secretary of the company or by any other person authorized by the Board for the purpose, by appending his signature to each entry and mentioning the date of the board resolution authorizing the same.

(2) Entries in the foreign register shall be authenticated by the person authorized by the Board by appending his signature to each entry.

Declaration in respect of beneficial interest in any shares.

7.7 (1)For the purposes of sub-section (1) of section 89, a person whose name is entered in the register of members of a company as the holder of shares in that company but who does not hold the beneficial interest in such shares (hereinafter called “the registered owner”), shall file with the company, a

declaration to that effect in Form No.7.4 in duplicate, within thirty days from the date on which his name is entered in the register of members of such company:

Provided that where any change occurs in the beneficial interest in such shares, the registered owner shall, within thirty days from the date of such change, make a declaration of such change to the company in Form No. 7.4 in duplicate.

(2) For the purposes of sub-section (2) of section 89, every person holding or acquiring a beneficial interest in shares of a company not registered in his name (hereinafter called “the beneficial owner”) shall file with the company, a declaration disclosing such interest in Form No. 7.5 in duplicate, within thirty days after acquiring such beneficial interest in the shares of the company:

Provided that where any change occurs in the beneficial interest in such shares, the beneficial owner shall, within thirty days from the date of such change, make a declaration of such change to the company in Form No. 7.5 in duplicate.

(3) For the purposes of sub-section (6) of section 89, where any declaration under section 89 is received by the company, the company shall make a note of such declaration in the register of members and shall file, within thirty days from the date of receipt of declaration by it, a return in Form No. 7.6 with the Registrar in respect of such declaration with fees prescribed in Annexure ‘B ’.

Closure of register of members/debenture holders/other security holders.

7.8 (1) For the purposes of sub-section (1) of section 91, a company closing the register of members or the register of debenture holders or the register of other security holders shall give at least seven days previous notice or such lesser period and in such manner, as may be specified by Securities and Exchange Board, if such company is a listed company or intends to get its securities listed, by advertisement at least once in a vernacular newspaper in the principal vernacular language of the district and having a wide circulation in the place where the registered office of the company is situated, and at least once in English language in an English newspaper circulating in that district and having wide circulation in the place where the registered office of the company is situated and publish the notice on the website as may be notified by the Central Government and on the website, if any, of the Company.

(2) The provisions contained in sub-rule (1) shall not be applicable to a private company provided that the notice has been served on all members of the private company not less than seven days prior to closure of the register of members/debenture holders/other security holders.

ANNUAL RETURN.

7.9 (1) For the purposes of sub-section (1) of section 92, every company shall prepare its annual return in Form No. 7.7.

(2) For the purposes of sub-section (2) of section 92, the annual return, filed by a listed company or a company having paid-up share capital of five crore rupees or more and turnover of twenty five crore rupees or more, shall be certified by a Company Secretary in practice. The certificate shall be in Form No. 7.8.

Extract of annual return.

7.10 (1) For the purposes of sub-section (3) of section 92, the extract of the annual return to be attached with the Board’s Report shall be in Form No. 7.9.

(2) For the purposes of sub-section (4) of section 92, a copy of the annual return shall be filed with the Registrar with such fee as provided in Annexure ‘B’.

Return of changes in shareholding position of promoters and top ten shareholders.

7.11 For the purposes of section 93, every listed company shall file with the Registrar, a return in Form No. 7.10 along with the fee as provided in Annexure ‘B’ with respect to any change in the shareholding position of promoters and top ten shareholders of the company within fifteen days of such change.

Inspection etc. of registers, returns etc.

7.12. (1) The registers and indices maintained pursuant to section 88 and copies of returns prepared pursuant to section 92, shall be open for inspection during business hours by any member, debenture holder, other security holder or beneficial owner without payment of fee and by any other person on payment of such fee as may be specified in the articles of association of the company but not exceeding fifty rupees for each inspection.

(2) Any such member, debenture holder, security holder or beneficial owner or any other person may require a copy of any such register or entries therein or return on payment of such fee as may be specified in the articles of association of the company but not exceeding ten rupees for each page.

Preservation of register of members etc. and annual return.

7.13 For the purposes of sub-section (1) of section 94,

(1) the register of members along with the index shall be preserved permanently and shall be kept in the custody of the company secretary of the company or any other person authorized by the Board for such purpose; and

(2) the register of debenture holders or any other security holders along with the index shall be preserved for a period of 15 years from the date of redemption of debentures or securities, as the case may be, and shall be kept in the custody of the company secretary of the company or any other person authorized by the Board for such purpose.

(3) Copies of all annual returns prepared under section 92 and copies of all certificates and documents required to be annexed thereto shall be preserved for a period of 8 years from the date of filing with the Registrar.

(4) The foreign register of members shall be preserved permanently unless it is discontinued and all the entries are transferred to any other foreign register or to the principal register. Foreign register of debenture holders or any other security holders shall be preserved for a period of 15 years from the date of redemption of such debentures/ securities.

(5) The foreign register shall be kept in the custody of the person authorized by the Board for authentication of the entries made therein.

Copies of the registers and annual return

7.14 For the purposes of clause (b) of sub-section (3) of section 94, copies of the registers maintained under section 88 or entries therein and annual return filed under section 92 may be furnished to any member, debenture-holder, other security holder or beneficial owner of the company or any other person on payment of such fee as may be prescribed in the Articles of Association of the company but not exceeding rupees ten for each page.

Calling of Extraordinary general meeting by requisitionists.

7.15. (1) The requisitionists may call an extraordinary general meeting in accordance with sub-section (2) of section 100, by giving not less than twenty-one days’ notice in writing or through electronic mode.

(2) The notice shall specify the place, date, day and hour of the meeting and shall contain the business to be transacted at the meeting.

(3) If the resolution is to be proposed as a special resolution, the notice shall be given as is required by sub-section (2) of section 114.

(4) The notice shall be signed by all the requisitionists or by a requisitionist duly authorized in writing by all other requisitionists on their behalf.

(5) No explanatory statement as required under section 102 need be annexed to the notice of an extraordinary general meeting convened by the requisitionists. The requisitionists may disclose the reasons for the resolution(s) which they propose to move at the meeting.

(6) The notice of the meeting shall be given to those members whose names appear in the Register of members of the company as on the date on which the requisitionists deposit with the Company a valid requisition for calling an extraordinary general meeting.

(7) The requisitionists shall have a right to receive and the company concerned is bound to give a list of members together with their registered address on the expiry of the forty fifth day from the date of deposit of the requisition. The aforesaid list shall be sent as early as possible but not later than three days from the expiry of the forty fifth day.

(8) The Notice of the meeting shall be given under by ordinary post or registered post or through electronic mode. Any accidental omission to give notice to, or the non-receipt of such notice by, any member shall not invalidate the proceedings of the meeting.

Notice of the meeting.

7.16. (1) For the purpose of sub-section (1) of section 101, a company may give notice through electronic mode.

Explanation: For the purpose of this rule, ‘electronic mode’ shall mean any communication sent by a company through its authorized and secured computer programme which is capable of producing confirmation and keeping record of such communication addressed to the person entitled to receive such communication at the last electronic mail address provided by the member.

(2) A notice may be sent through e-mail as a text or as an attachment to e-mail or as a notification providing electronic link/ Uniform Resource Locator (URL) for accessing such notice.

(3) (i) The e-mail shall be addressed to the person entitled to receive such e-mail as per the records of the company. The company shall provide an advance opportunity to the member to register his e-mail address and changes therein from time to time.

(ii) The subject line in e-mail shall state the name of the company, notice of the type of meeting and the date on which meeting is scheduled.

(iii) If notice is sent in the form of an attachment to e-mail, such attachment shall be in the Portable Document Format (PDF) or electronic documentation format together with a facility for recipient for downloading relevant version of the software for accessing such notice along with instructions for downloading such software and alternative contact details in case of inability of the recipient to open or read the attachment.

(iv) There shall be no difference in the text of the physical version of the notice and electronic version except in respect of mode of dispatch of notice.

(v) Sending of notice via e-mail shall be subject to such option being confirmed by the member and e-mail address being updated in writing at least 30 days prior to dispatch of notice. In such cases, the company shall not be under obligation to deliver physical copy of the notice unless specifically requested by the member in writing before the date of the meeting.

(vi) When notice or notifications of availability of notice are sent by e-mail, the company should ensure that it uses a system which produces confirmation of the total number of recipients e-mailed and a record of each recipient to whom the notice has been sent. A copy of such record and any notices of any failed transmissions and subsequent re-sending shall be retained by or on behalf of the company as ‘proof of sending’.

(vii) The company’s obligation shall be satisfied when it transmits the e-mail and the company will not be held responsible for a failure in transmission beyond its control. However the company shall, where it is aware of the failure in delivery of the e-mail (and subsequent attempts do not rectify the situation), revert to sending physical copy of the notice at the member’s registered address within 72 hours of the original attempt.

(viii) If a member entitled to receive notice fails to provide or update relevant e-mail address to the company, company shall not be in default for not delivering notice via e-mail.

(ix) Company may send e-mail through in-house facility or authorize any third party agency providing bulk e-mail facility.

(x) Notice made available on the electronic link/ URL has to be readable, and the recipient should be able to obtain and retain copies. The company shall give the complete URL/address of the website and full details of how to access the document/information.

(xi) The notice is taken to be ‘sent’ on the date the notification is sent. The notice must be available on the electronic link/ URL provided from the date of notification until the conclusion of the meeting. The failure to make notice available throughout the required period shall be disregarded if it is made available for part of that period and the failure is wholly attributable to circumstances that the company could not reasonably have prevented or avoided.

(4) The notice of the general meeting of the company shall be simultaneously placed on the website of the company and on the website as may be notified by the Central Government.

Proxies.

7.17. (1) For the purpose of third proviso to the sub-section (1) of section 105, a member of a company registered under section 8 shall not be entitled to appoint any other person as his proxy unless such other person is also a member of such company.

(2) No person shall act as proxy on behalf of members not exceeding fifty and holding in the aggregate not more than ten percent of the total share capital of the company carrying voting rights.

(3) For the purposes of sub-section (6) of section 105, the appointment of proxy shall be in the Form No. 7.11.

Voting through electronic means.

7.18.(1) For the purposes of section 108, every listed company or a company having five hundreds or more shareholders may provide to its members facility to exercise their right to vote at general meetings by electronic means.

(2) For the purposes of section 108, a member may exercise his right to vote at any general meeting by electronic means and company may pass any resolution by electronic voting system in accordance with the provisions of this rule.

Explanation.-I. For the purposes of this rule, ‘voting by electronic means’ or ‘electronic voting system’ means a ‘secured system’ based process of display of electronic ballots, recording of votes of the members and the number of votes polled in favour or against, such that the entire voting exercised by way

of electronic means gets registered and counted in an electronic registry in a centralized server with adequate ‘cyber security’.

II. ‘Secured system’ means computer hardware, software, and procedure that –

(a) are reasonably secure from unauthorized access and misuse;

(b) provide a reasonable level of reliability and correct operation;

(c) are reasonably suited to performing the intended functions; and

(d) adhere to generally accepted security procedures.

III. “Cyber security” means protecting information, equipment, devices, computer, computer resource, communication device and information stored therein from unauthorized access, use, disclosures, disruption, modification or destruction.

(3) A company which opts to provide the facility to its members to exercise their votes at any general meeting by electronic voting system shall follow the following procedure:

Explanation- For the purposes of this rule, ‘agency’ means an agency approved by the Ministry of Corporate Affairs and appointed by a company for providing and supervising electronic platform for voting by electronic means.

Provided that the company may itself get registered with Ministry of Corporate Affairs for providing and supervising electronic platform for voting by electronic means. The Ministry may authorize the agency from the approved list.

(i) The notices of the meeting shall be sent to all the members/ auditors of accompany/directors/key managerial personal either, -

(a) by Registered Post or speed post with AD, or

(b) through electronic means like registered e-mail id etc,

in accordance with the provisions of section 101.

(ii) The notice shall also be placed on the website of the company, if any and of the agency forthwith after it is sent to the members.

(iii) The notice of the meeting shall clearly mention that the business may be transacted through electronic voting system and the company is providing facility for voting by electronic means.

(iv) The notice shall clearly indicate the process and manner for voting by electronic means and time schedule including the time period during which the votes may be cast, address of places for casting votes duly sorted in order of name of states or union territories, where the members can cast their votes electronically.

(v) The company shall cause an advertisement to be published, not less than five days before the date of beginning of the voting period, at least once in a vernacular newspaper in the principal vernacular language of the district in which the registered office of the company is situated, and having a wide circulation in that district, and at least once in English language in an English newspaper having a wide circulation in that district, about having sent the notice of the meeting and specifying therein, inter alia, the following matters:

(a) statement that the business may be transacted by electronic voting;

(b) the date of completion of sending of notices;

(c) the date and time of commencement of voting through electronic means;

(d) the date and time of end of voting through electronic means;

(e) the statement that voting shall not be allowed beyond the said date and time;

(f) website address of the company and agency, if any, where notice of the meeting is displayed; and

(g) contact details of the person responsible to address the grievances connected with the electronic voting.

(vi) E-voting shall remain open for not less than seven days and not more than ten days.

(vii) During the e-voting period, shareholders of the company, holding shares either in physical form or in dematerialized form, as on the record date, may cast their vote electronically:

Provided that once the vote on a resolution is cast by the shareholder, he shall not be allowed to change it subsequently.

(viii)At the end of the voting period, the portal where votes are cast shall forthwith be blocked.

(ix)The Board of directors shall appoint one scrutinizer, who is not in employment of the company and is a person of repute who, in the opinion of the Board can scrutinize the e-voting process in a fair and transparent manner:

Provided that the scrutinizer so appointed may take assistance of a person who is not in employment of the company and who is well-versed with the e-voting system.

(x)The scrutinizer shall be willing to be appointed and be available for the purpose of ascertaining the requisite majority.

(xi)The scrutinizer shall, within a period of not exceeding three working days from the date of conclusion of e-voting period, unblock the votes in the presence of at least two witnesses and make a scrutinizer’s report of the votes cast in favour or against, if any, forthwith to the Chairman.

(xii) The scrutinizer shall maintain a register either manually or electronically to record the consent or otherwise, received, mentioning the particulars of name, address, folio number or client ID of the shareholders, number of shares held by them, nominal value of such shares and whether the shares have differential voting rights.

(xiii) The register and all other papers relating to electronic voting shall remain in the safe custody of the scrutinizer till the chairman considers, approves and signs the minutes. Thereafter, the scrutinizer shall return the register and other related papers to the company.

(xiv) The results declared along with the scrutinizer’s report shall be placed on the website of the company and on the website of the agency within two days of passing of the resolution at the relevant general meeting of members.

(xv) Subject to receipt of sufficient votes, the resolution shall be deemed to be passed on the date of the relevant general meeting of members.

(xvi) Words and expressions used in this rule but not defined shall, unless the context otherwise requires, bear the meaning, if any, as assigned to them under the Act and Information Technology Act, 2000.

Manner in which the Chairman of meeting shall get the poll process scrutinised and report thereon.

7.19. (1) For the purpose of sub-section (5) of section 109 the Chairman of a meeting shall ensure that -

(a) The Scrutinizers are provided with the Register of Members, specimen signatures of the members, Attendance Register and Register of Proxies.

(b) The Scrutinizers are provided with all the documents received by the Company pursuant to Section 105, 112 and 113.

(c) The Scrutinizers shall initial the Polling papers and distribute them to the members and proxies present at the meeting. In case of joint shareholders, the polling paper shall be given to the first named holder or in his absence to the joint holder attending the meeting as appearing in the chronological order in the folio. The Polling paper shall be in Form No. 7.12.

(d) The Scrutinizers shall keep a record of the polling papers issued.

(e) The Scrutinizers shall lock and seal an empty polling box in the presence of the members and proxies.

(f) The Scrutinizers shall open the Polling box in the presence of two persons as witnesses after the voting process is over.

(g) In case of ambiguity about the validity of a proxy, the Scrutinizers shall decide the validity in consultation with the Chairman.

(h) The Scrutinizers shall ensure that if a member who has appointed a proxy has voted in person, the proxy’s vote shall be disregarded.

(i) The Scrutinizers shall count the votes cast on poll and prepare a report thereon addressed to the Chairman.

(j) Where voting is conducted by electronic means under the provisions of section 108 and rules made thereunder, the company shall provide all the necessary support, technical and otherwise, to the Scrutinizers in orderly conduct of the voting and counting the result thereof.

(k) The Scrutinizers’ report shall state total votes cast, valid votes, votes in favour and against the resolution including the details of invalid polling papers and votes comprised therein.

(l) The Scrutinizers shall submit the Report to the Chairman who shall counter-sign the same.

(m) The Chairman shall declare the result of Voting on

poll. The result may either be announced by him or

a person authorized by him in writing.

(2) The scrutinizer/s appointed for the poll, shall submit a report to the Chairman of the meeting in Form No. 7.13. The report shall be signed by the scrutinizer / all the scrutinizers, in case there is more than one scrutinizer, and be submitted by them to the Chairman of the meeting within 7 days from the date the poll is taken.

Procedure to be followed for conducting business through postal ballot.

7.20. (1) For the purposes of section 110, where a company is required or decides to pass any resolution by way of postal ballot, it shall send a notice to all the shareholders, along with a draft resolution explaining the reasons therefor and requesting them to send their assent or dissent in writing on a postal ballot or by electronic means within a period of thirty days from the date of dispatch of the notice.

(2) The notice shall be sent by speed post or registered post acknowledgement due or by electronic means and shall include with the notice where it is sent by post, a postage pre-paid envelope for facilitating the communication of the assent or dissent of the shareholder to the resolution within the said period of thirty days.

(3) An advertisement shall be published at least once in a vernacular newspaper in the principal vernacular language of the district in which the registered office of the company is situated, and having a wide circulation in that district, and at least once in English language in an English newspaper having a wide circulation in that district, about having dispatched the ballot papers and specifying therein, inter alia, the following matters:

(a) a statement to the effect that the business is to be transacted by postal ballot which includes voting by electronic means;

(b) the date of completion of dispatch of notices;

(c) the date of commencement of voting;

(d) the date of end of voting;

(e) the statement that any postal ballot received from the member beyond the said date will not be valid and voting whether by post or by electronic means shall not be allowed beyond the said date;

(f) a statement to the effect that members, who have not received postal ballot forms may apply to the company and obtain a duplicate thereof; and

(g) contact details of the person responsible to address the grievances connected with the voting by postal ballot including voting by electronic means.

(4) The notice of the postal ballot shall also be placed on the website of the company forthwith after the notice is sent to the members and such notice shall remain on such website till the last date for receipt of the postal ballots from the members.

(5) The Board of directors shall appoint one scrutinizer, who is not in employment of the company and who, in the opinion of the Board can conduct the postal ballot voting process in a fair and transparent manner.

(6) The scrutinizer shall be willing to be appointed and be available for the purpose of ascertaining the requisite majority.

(7) If a resolution is assented to by the requisite majority of the shareholders by means of postal ballot including voting by electronic means, it shall be deemed to have been duly passed at a general meeting convened in that behalf.

(8) Postal ballot received back from the shareholders shall be kept in the safe custody of the scrutinizer. After the receipt of assent or dissent of the shareholder in writing on a postal ballot, no person shall deface or destroy the ballot paper or declare the identity of the shareholder.

(9) The scrutinizer shall submit his report as soon as possible after the last date of receipt of postal ballots but not later than seven days thereof;

(10) The scrutinizer shall maintain a register either manually or electronically to record their assent or dissent received, mentioning the particulars of name, address, folio number or client ID of the shareholder, number of shares held by them, nominal value of such shares, whether the shares have differential voting rights, if any, details of postal ballots which are received in defaced or mutilated form and postal ballot forms which are invalid.

(11) The postal ballot and all other papers relating to postal ballot including voting by electronic means, shall be under the safe custody of the scrutinizer till the chairman considers, approves and signs the minutes. Thereafter, the scrutinizer shall return the ballot papers and other related papers/register to the company who shall preserve such ballot papers and other related papers/register safely.

(12) The consent or otherwise received after thirty days from the date of issue of notice shall be treated as if reply from the member has not been received.

(13) The results shall be declared by placing it, along with the scrutinizer’s report, on the website of the company.

(14) The resolution shall be deemed to be passed on the date of declaration of its result.

(15) The provisions of Rule 7.18 regarding voting by electronic means shall apply, as far as applicable, mutatis mutandis to this rule in respect of the voting by electronic means.

(16) Pursuant to clause (a) of sub-section (1) of section 110, the following items of business shall be transacted only by means of voting through a postal ballot-

(a) Alteration of the objects clause of the memorandum and in the case of the company in existence immediately before the commencement of the Act, alteration of the main objects of the memorandum;

(b) Alteration of articles of association in relation to insertion or removal of provisions which, under sub-section (68) of section 2, are required to be included in the articles of a company in order to constitute it a private company;

(c) Change in place of registered office outside the local limits of any city, town or village as specified in sub-section (5) of section 12;

(d) Change in objects for which a company has raised money from public through prospectus and still has any unutilized amount out of the money so raised under sub-section (8) of section 13;

(e) Issue of shares with differential rights as to voting or dividend or otherwise under sub-clause (ii) of clause (a) of section 43;

(f) Variation in the rights attached to a class of shares or debentures or other securities as specified under section 48;

(g) Buy-back of shares by a company under sub-section (1) of section 68;

(h) Election of a director under section 151 of the Act;

(i) Sale of the whole or substantially the whole of an undertaking of a company as specified under sub-clause (a) of sub-section (1) of section 180;

(j) Giving loans or extending guarantee or providing security in excess of the limit prescribed under sub-section (3) of section 186;

Provided that One Person Company and other companies having members upto fifty are not required to transact any business through postal ballot.

Special Notice.

7.21 (1) For the purposes of section 115, a special notice required to be given to the company shall be signed, either individually or collectively by such number of members holding not less than one percent of total voting power or holding shares on which an aggregate sum of not less than one lakh rupees has been paid up on the date of the notice.

(2) Such notice shall be sent by members to the company not earlier than three months but at least 14 days before the date of the meeting at which the resolution is to be moved, exclusive of the day on which the notice is given and the day of the meeting.

(3) The company shall immediately after receipt of the notice, give its members notice of the resolution at least seven days before the meeting , exclusive of the day of dispatch of notice and day of the meeting , in the same manner as it gives notice of any general meetings.

(4) Where it is not practicable to give the notice in the same manner as it gives notice of any general meetings, the notice shall be published in English language in English newspaper and in vernacular language in a vernacular newspaper, both having wide circulation in the State where the registered office of the Company is situated. Such notice shall also be posted on the website, if any, of the Company. Such notice shall be published at least seven days before the meeting, exclusive of the day of publication of the notice and day of the meeting.

Resolutions and agreements to be filed.

7.22. For the purposes of sub-section (1) of section 117, a copy of every resolution or any agreement required to be filed, together with the explanatory statement under section 102, if any, shall be filed with the Registrar in Form No. 7.14 along with the fee or additional fee as provided in Annexure-‘ B ’.

Minutes of proceedings of general meeting, meeting of Board of Directors and other meetings and resolutions passed by postal ballot

7.23. (1) For the purposes of sub-section (1) of section 118,

(a) A distinct minute book shall be maintained for each type of meeting namely:

(i) general meetings of the members;

(ii) meetings of the creditors

(iii) meetings of the Board; and

(iv) Meetings of the committees of the Board.

Explanation: Resolutions passed by postal ballot shall be recorded in the minute book of general meetings as if it has been deemed to be passed in the general meeting.

(b) In no case the minutes of proceedings of a meeting or a resolution passed by postal ballot shall be pasted to any such book.

(c) (i) Minutes of proceedings of each meeting shall be entered in the books maintained for that purpose along with the date of such entry within thirty days of the conclusion of the meeting.

(ii) In case of every resolution passed by postal ballot, a brief report on the postal ballot conducted including the resolution proposed, the result of the voting thereon and the summary of the scrutinizer’s report shall be entered in the minutes book of general meetings along with the date of such entry within thirty days from the date of passing of resolution.

Explanation: For the purpose of sub-section (1) of section 118, “kept within thirty days of the conclusion of every such meeting concerned, or passing of resolution by postal ballot” shall mean “entered in the minutes book within thirty days of the conclusion of every such meeting concerned, or passing of resolution by postal ballot and signed as prescribed in clause (d) hereafter”

(d) Each page of every such book shall be initialed or signed and the last page of the record of proceedings of each meeting or each report in such books shall be dated and signed –

(i) in the case of minutes of proceedings of a meeting of the Board or of a committee thereof, by the chairman of the said meeting or the chairman of the next succeeding meeting;

(ii) in the case of minutes of proceedings of a general meeting, by the chairman of the same meeting within the aforesaid period of thirty days or in the event of the death or inability of that chairman within that period, by a director duly authorized by the Board for the purpose.

(iii) In case of every resolution passed by postal ballot, by the chairman of the Board within the aforesaid period of thirty days or in the event of there being no chairman of the Board or the death or inability of that chairman within that period, by a director duly authorized by the Board for the purpose.

(e) Minute books of general meetings shall be kept at the registered office of the company. Minutes of the Board and committee meetings shall be kept at the registered Office or at such other place as may be approved by the Board.

(f) Minutes books shall be preserved permanently and kept in the custody of the company secretary of the company or any director duly authorized by the Board for the purpose and shall be kept in the registered office or such place as the members may decide by passing special resolution pursuant to requirement of section 88 read with section 94 of the Act.

Copy of minute book of general meeting.

7.24. For the purposes of sub-section (2) of section 119, any member shall be entitled to be furnished, within seven working days after he has made a request in that behalf to the company, with a

copy of any minutes of any general meeting, on payment of such sum as may be specified in the articles of the company but not exceeding a sum of ten rupees for each page or part of any page.

Provided that a member who has made a request for provision of soft copy in respect of minutes of any previous general meetings held during a period of immediately preceding three financial years shall be entitled to be furnished, with the same free of cost.

Maintenance and inspection of document in electronic form.

7.25. (1) For the purposes of section 120, every listed company or a company having not less than one thousand share holders, debenture holders and other security holders, shall maintain its records, as required to be maintained under the Act or rules made there under, in electronic form.

(2) The records in electronic form shall be maintained in such manner as the Board of directors of the company may think fit, provided that -

(a) the records are maintained in the same formats and in accordance with all other requirements as provided in the Act or the rules made there under;

(b) the information as required under the provisions of the Act or the rules made there under should be adequately recorded for future reference;

(c) the records must be capable of being readable, retrievable and reproducible in printed form;

(d) the records are capable of being dated and signed digitally wherever it is required under the provisions of the Act or the rules made there under;

(e) the records, once dated and signed digitally, shall not be capable of being edited or altered;

(f) the records shall be capable of being updated, according to the provisions of the Act or the rules made there under, and the date of updation shall be capable of being recorded on every updation;

Explanation: - For the purpose of this rule, the term "records” means any register, index, agreement, memorandum, minutes or any other document required by the Act or the rules made there under to be kept by a company.

Security of records maintained in electronic form

(3) (i) The Managing Director, Company Secretary or any other director or officer of the company as the Board may decide shall be responsible for the maintenance and security of electronic records.

(ii) The person who is responsible for the maintenance and security of electronic records shall-

(a) provide adequate protection against unauthorized access, alteration or tampering of records;

(b) ensure against loss of the records as a result of damage to, or failure of the media on which the records are maintained;

(c) ensure that the signatory of electronic records does not repudiate the signed record as not genuine;

(d) ensure that computer systems, software and hardware are adequately secured and validated to ensure their accuracy, reliability and consistent intended performance;

(e) ensure that the computer systems can discern invalid and altered records;

(f) ensure that records are accurate, accessible, and capable of being reproduced for reference later;

(g) ensure that the records are at all times capable of being retrieved to a readable and printable form;

(h) ensure that records are kept in a non-rewriteable and non-erasable format like pdf. version or some other version which cannot be altered or tampered;

(i) ensure that at least two backups, taken at a periodicity of not exceeding one day, are kept of the updated records kept in electronic form, every backup is authenticated and dated and such backups shall be securely kept at such places as may be decided by the Board;

(j) limit the access to the records to the managing director, company secretary or any other director or officer as may be authorized by the Board in this behalf;

(k) ensure that any reproduction of non-electronic original records in electronic form is complete, authentic, true and legible when retrieved;

(l) arrange and index the records in a way that permits easy location, access and retrieval of any particular record; and

(m) take necessary steps to ensure security, integrity and confidentiality of records.

Inspection and copies of records maintained in electronic form.

(4) Where a company maintains its records in electronic form, any duty imposed by the Act or rules made there under to make those records available for inspection or to provide copies of the whole or a part of those records, shall be construed as a duty to make the records available for inspection in electronic form or to provide copies of those records containing a clear reproduction of the whole or part thereof, as the case may be.

Penalty

(5) If any default is made in compliance with any of the provisions of this rule, the company and every officers or such other person who is in default shall be punishable with fine which may extend to five thousand rupees and where the contravention is a continuing one, with a further fine which may extend to five hundred rupees for every day after the first during which such contravention continues.

Report on Annual General Meeting.

7.26. (1) The report in pursuance of the provisions of sub-section (1) of section 121 shall be prepared in the following manner:

(a) A report under this section shall be prepared in addition to the minutes of the general meeting.

(b) The report shall be signed and dated by the Chairman of the meeting or in case of his inability to sign, by any two directors of the company, one of whom shall be the Managing director, if there is one.

(c) Such report shall contain the details in respect of the following:

(i) The day, date, hour and venue of the annual general meeting.

(ii) Confirmation with respect to appointment of Chairman of the meeting.

(iii) Number of members attending the meeting.

(iv) Confirmation of quorum.

(v) Confirmation with respect to compliance of the Act and the Rules made there under with respect to calling, convening and conducting the meeting.

(vi) Confirmation that the secretarial standards with respect to general meetings have been observed.

(vii) Business transacted at the meeting and result thereof.

(viii) Particulars with respect to any adjournment, postponement of meeting, change in venue and

(ix) any other points relevant for inclusion in the Report.

(d) Such Report shall contain fair and correct summary of the proceedings of the meeting.

(2) The copy of the report prepared in pursuance of sub-section (1) of section 121 and sub-rule (1), shall be filed with the Registrar within thirty days of the conclusion of the annual general meeting alongwith the fee or additional fee, as the case may be, as provided in Annexure ‘B’:

 

DRAFT RULES UNDER COMPANIES ACT, 2013

CHAPTER XIII

APPOINTMENT AND REMUNERATION

OF MANAGERIAL PERSONNEL

13.1. For the purposes of second proviso to sub-section (4) of section 196, a company shall file a return of appointment of a managing director, whole time director or manager with the Registrar in Form No. 13.1 along with such fee as specified in Annexure ‘B’.

Sitting fees.

13.2. (1) For the purposes of first and second proviso to sub-section (5) of section 197, companies or class of companies may pay the following amount of fees to their directors for attending the meeting of its Board or committees thereof:

(2) The amount of sitting fees payable to a director for attending meetings of the Board or committees thereof may be such as may be decided by the Board of directors or the Remuneration Committee thereof which shall not exceed the sum of rupees One Lakh per meeting of the Board or committee thereof:

Provided that the Board may decide different sitting fee payable to independent and non-independent directors other than whole-time directors.

Disclosure in Board’s report.

13.3. (1) For the purposes of sub-section (12) of 197, every listed company shall disclose in the Board’s report:

i. the ratio of the remuneration of each director to the median remuneration of the employees of the company for the financial year ;

ii. Percentage increase in remuneration of each director and CEO in the financial year;

iii. Percentage increase in the median remuneration of employees in the financial year;

iv. Number of permanent employees on the rolls of company;

v. Explanation on the relationship between average increase in remuneration and company performance;

vi. Comparison of the remuneration of the Key Managerial Personnel against the performance of the company;

vii. The key parameters for any variable component of remuneration availed by the directors;

viii. The ratio of the remuneration of the highest paid director to that of the employees who are not directors but receive remuneration in excess of the highest paid director during the year.

ix. Affirmation that the remuneration is as per the remuneration policy of the company

Explanation I: For the purposes of this rule, median means the numerical value separating the higher half of a population from the lower half. The median of a finite list of numbers may be found by arranging all the observations from lowest value to highest value and picking the middle one. If there is an even number of observations, the median shall be the average of the two middle values.

Explanation II: For calculating median of salaries:-

• Arrange the salary data for all the employees (falling under one category) in ascending order. (Salary shall be inclusive of all perquisites and allowances calculated on the basis of cost to the company.)
• Count total number of employees.
  • If the number of employees is odd then, Median = Salary of nth employee where n = (total number of employees+1) / 2

Table 1

	Salary (INR)
Employee 1	10,000
Employee 2	15,000
Employee 3	16,000
Employee 4	25,000
Employee 5	30,000

 

In the example shown under Table 1, number of employees is five, Median will be salary of 3rd employee [n= (5+1)/2=3]. Hence the median will be INR 16,000.

• If the number of employees is even then, Median = Average of the salaries of nth and (n+1) th employee where n = total number of employees / 2

Table 2

	Salary (INR)
Employee 1	10,000
Employee 2	15,000
Employee 3	16,000
Employee 4	25,000
Employee 5	30,000
Employee 5	35,000

 

In example, shown under Table 2, number of employees is six, Median will be average of salaries of 3rd and 4th employee [n=(6/2)=3 and (n+1)=(3+1)=4]. Hence the median will be INR 20,500 (average of INR 16,000 and INR 25,000).

(2) The board’s report shall include a statement showing the name of every employee of the company who-

(i) if employed throughout the financial year, was in receipt of remuneration for that year which, in the aggregate, was not less than sixty lakh rupees;

(ii) if employed for a part of the financial year, was in receipt of remuneration for any part of that year, at a rate which, in the aggregate, was not less than five lakh rupees per month;

(iii) if employed throughout the financial year or part thereof, was in receipt of remuneration in that year which, in the aggregate, or as the case may be, at a rate which, in the aggregate, is in excess of that drawn by the managing director or whole-time director or manager and holds by himself or along with his spouse and dependent children, not less than two percent of the equity shares of the company.

(3) Statement referred to in sub-rule (2) above shall also indicate -

(i) Designation of the employee;

(ii) Remuneration received;

(iii) Nature of employment, whether contractual or otherwise;

(iv) Qualifications and experience of the employee;

(v) Date of commencement of employment;

(vi) The age of such employee;

(vii) The last employment held by such employee before joining the company;

(viii) The percentage of equity shares held by the employee in the company within the meaning of sub-clause (iii) of sub-rule (2) above; and

(ix) Whether any such employee is a relative of any director or manager of the company and if so, name of such director.

Provided that particulars of employees posted and working in a country outside India, not being directors or their relatives, drawing more than sixty lakh rupees per financial year or five lakh rupees per month, as the case may be, shall not be included in such statement of the Board’s report but such particulars shall be filed with the Registrar of Companies while filing the financial statement and Board Reports:

Provided further that such particulars shall be made available to any shareholder on a specific request made by him during the course of annual general meeting wherein financial statements for the relevant financial year are proposed to be adopted by shareholders.

Applications to the Central Government.

13.4 For the purposes of item (e) of section 200, the Central Government or the company shall have regard to the following matters:

(1) Financial and operating performance of the company during the three preceding financial years.

(2) Relationship between remuneration and performance.

(3) The principle of proportionality of remuneration within the company, ideally by a rating methodology which compares the remuneration of directors to that of other executive directors on the board and employees or executives of the company.

(4) Whether remuneration policy for directors differs from remuneration policy for other employees and if so, an explanation for the difference.

(5) The securities held by the director, including options and details of the shares pledged as at the end of the preceding financial year.

13.5. (1) For the purposes of sub-section (1) of section 201, every application made to the Central Government under the provisions of Chapter XIII shall be made in Form No. 13.2. and shall be accompanied by fee as provided under Annexure ‘B’.

(2) Companies other than listed companies and subsidiary of a listed company may without Central Government approval pay remuneration to its managerial person in the event of no profit or inadequate profit beyond ceiling prescribed in section II, part II of Schedule V subject to complying with the following conditions:-

(i) Payment of remuneration is approved by a resolution passed by the Board and, in the case of a company covered under sub-section (1) of section 178 also by the Nomination and Remuneration Committee, if any and wild doing so record in writing clear reason and justification for payment of remuneration beyond the said limit;

(ii) the company has not made any default in repayment of any of its debts (including public deposits) or debentures or interest payable thereon for a continuous period of thirty days in the preceding financial year before the date of appointment of such managerial person;

(iii) Prior approval of shareholders by way of a special resolution at a general meeting of the company for payment of remuneration for a period not exceeding three years;

(iv) A statement along-with a notice calling the general meeting referred to clause (iii) of sub-rule (2) above, shall contain the information as per sub clause (iv) of second proviso to clause (B) of section II of part-II of Schedule V of the Act including reasons and justification for payment of remuneration beyond the said limit.

Appointment of Key Managerial Personnel

13.6. For the purposes of sub-section (1) of section 203, every listed company and every other company having a paid-up share capital of five crore rupees or more shall have whole-time key managerial personnel.

SECRETARIAL AUDIT

13.7. (1) For the purposes of sub-section (1) of section 204, the other class of companies shall be as under:

(a) Every public company having a paid-up share capital of one hundred crore rupees or more.

(2) For the purposes of sub-section (1) of section 204, the format of the Secretarial Audit Report shall be in Form No.13.3.

Duties of Company Secretary

13.8. For the purposes of clause (c) of sub-section (1) of section 205, the duties of Company Secretary shall also include-

1) to provide to the directors of the company, collectively and individually, such guidance as they may require, with regard to their duties, responsibilities and powers;

2) to convene and attend Board, committee and general meetings, and maintain the minutes of these meetings;

3) To obtain approvals from the Board, general meetings, the Government and such other authorities as required under the provisions of the Act.

4) To represent before various regulators, Tribunal and other authorities under the Act in connection with discharge of various functions under the Act;

5) to assist the Board in the conduct of the affairs of the company;

6) to assist and advise the Board in ensuring good corporate governance and in complying with the corporate governance requirements and best practices; and

7) to discharge such other duties as may be assigned by the Board from time to time.

8) Such other duties as have been prescribed under the Act and Rules.

 

DRAFT RULES UNDER COMPANIES ACT 2013

CHAPTER XV

COMPROMISES, ARRANGEMENT AND AMALGAMATIONS

15.1 Application for order of a meeting

(1) An application along with a Notice of Admission supported by an affidavit in Form No. 15.1 under sub-section (1) of section 230 for an order of a meeting may be moved by a company or any creditor or member of the company, or in the case of a company which is being wound up, of the liquidator, for an order of a meeting of the creditors or class of creditors, or of the members or class of members, as the case may be, and such application shall be accompanied by documents mentioned therein.

(2) Upon the hearing of the application or any adjourned hearing thereof, the Registrar of Tribunal shall, unless he thinks fit for any reason to dismiss the application, give such directions as he may think necessary in respect of the following matters:-

(a) determining the class or classes of creditors and/or of members whose meeting or meetings have to be held for considering the proposed compromise or arrangement;

(b) fixing the time and place of such meeting or meetings;

(c) appointing a chairperson(s) for the meeting or meetings to be held, as the case may be;

(d) fixing the quorum and the procedure to be followed at the meeting or meetings, including voting by proxy;

(e) determining the values of the creditors and/or the members, or the creditors or members of any class, as the case may be, whose meetings have to be held;

(f) notice to be given of the meeting or meetings and the advertisement of such notice;

(g) the time within which the chairman of the meeting is to report the result of the meeting to the Tribunal; and

(h) such other matters as the Tribunal may deem necessary.

(i)

(3) Where a petition for winding-up of the company or a petition under section 241 of chapter XVI of the Act, is pending, notice of the application shall also be given to the petitioner in such petition.

15.2 Disclosures in application made to the Tribunal for compromise or arrangement – Creditors Responsibility Statement.

For the purposes of sub-clause (i) of clause (c) of sub-section (2) of section 230, the creditor’s responsibility statement in Form No. 15.2 shall be included in the scheme of corporate debt restructuring. This Form shall be signed by each of the consenting secured creditors.

15.3 Notice of meeting.

(1) The notice of the meeting pursuant to the order of the Tribunal to be given in the manner provided in sub section (3) of Section 230 shall be in Form No. 15.3, and shall be sent individually specifying therein, inter alia, the following --

(1) details of the order of the Tribunal directing the calling, convening and conducting of the meeting;

(a) Date of the Order

(b) Date, Time and Venue of the Meeting

(2) details of the company including:

(a) CIN / GLN of the company;

(b) name of the company;

(c) date of incorporation;

(d) status of the company (whether public/private/OPC);

(e) Registered Office address and E-mail id;

(f) object(s) as per the memorandum of association and main business carried on by the company;

(g) details of change of name, registered office and objects of the company in last five years;

(h) name of the stock exchanges where securities of the company are listed, if applicable;

(i) details of the capital structure of the company including authorized, issued, subscribed and paid up share capital; and

(j) details of the promoters, directors and key managerial personnel including name, address and designation and other particulars .

(3) if the scheme of compromise or arrangement relates to more than one company, the fact and details of any relationship subsisting between such companies including holding, subsidiary or of associate companies;

(4) the date of the board meeting at which the scheme was approved by the Board of directors including the name of the directors voted in favor of the resolution, voted against the resolution and not voted/ participated on such resolution;

(5) details of the scheme of compromise or arrangement including:

i. parties involved in such compromise or arrangement;

ii. in case of amalgamation or merger, appointed date, share exchange ratio and other consideration, if any;

iii. valuation report including basis of valuation and fairness opinion of the registered valuer, if any;

iv. details of capital/debt restructuring, if any;

v. rationale for the compromise or arrangement;

vi. benefits of the compromise or arrangement as perceived by the board of directors to the company, members, creditors and others;

vii. amount due to other unsecured Creditors and the security available to the creditors thereon

(6) disclosure of nature and extent of interest and effect of compromise or arrangement on such interest of:

(a) key managerial personnel;

(b) directors;

(c) promoters;

(d) non-promoter members;

(e) depositors;

(f) creditors;

(g) debenture holders;

(h) deposit and debenture trustee(s);

(i) promoters, directors, and key managerial personnel of holding company, subsidiary and associate companies;

(j) employees of the company stating clearly that the changes, if any, in the terms and conditions of employment are not detrimental to the interest of the employees;

(7) where there is no interest or there is no effect on such interest of any promoter, director or key managerial personnel, a statement to the effect that there is no interest or there is no effect of the scheme of compromise or arrangement on such interests of such persons;

(8) investigation proceedings, if any, pending against the company or against any promoter, director or key managerial personnel of such company;

(9) details of shareholding of directors, key managerial personnel and promoters of the company as on the date of making this statement and change in their shareholding in the last six months including the date on which and price at which change took place;

(10) details of any No-objection(s), approvals or sanctions, if already received from the concerned authorities for the compromise or arrangement;

(11) details of the availability of the following documents for obtaining extract from or for making copies of or for inspection by the members and creditors, namely:

(a) latest audited financial statements of the company including consolidated financial statements;

(b) copy of the order of Tribunal in pursuance of which the meeting is to be convened;

(c) copy of scheme of compromise or arrangement;

(d) contracts or agreements material to the compromise or arrangement; and

(e) such other information/documents as the Board/Management believes necessary and relevant for making decision for / against the scheme;

(12) declaration to the effect that the scheme is in the best interests of the employees, creditors, debenture holders, members particularly non-promoter members and minority shareholders of the company, as detailed in the scheme.

(13) status of approval(s) of regulatory or any other authority(ies), required, if any in connection with compromise or arrangement,.

(14) The notice shall provide for the information required under sub section (4) of section 230 of the Act.

Explanation- For the purposes of this rule, disclosure required to be made by a company shall be made in respect of all the companies which are the part of the compromise or arrangement.

(2) The notice shall be sent by the chairman appointed for the meeting, or, if the Tribunal so directs, by the company (or its liquidator), or any other person as the Tribunal may direct, by post, e-mail or any other mode as directed by the Tribunal to their last known addresses at least four weeks before the date fixed for the meeting.

15.4 Notice to Central Government, Regulatory Authorities etc.

(1) For the purposes of sub-section (5) of section 230, the notice of the meeting under sub-section (3) of section 230 and a copy of the scheme of compromise or arrangement shall be sent to such authorities as are mentioned in sub-section (5) of section 230 in Form 15.4.

(2) The notice to the above authorities shall be sent forthwith after the notice has been sent to the members or creditors of the company, either by hand delivery or by registered or speed post or by such electronic or other mode as prescribed in terms of section 20, i.e., service of documents.

(3)Representation, if any, under sub-section (5) of section 230 shall be made within a period of 30 days from the date of receipt of such notice, before the Tribunal failing which it shall be presumed that they have no representation to make on the proposal;

Provided that a copy of the representation, if any, shall be sent to the Chairperson of the meeting within the period of 30 days from the date of the receipt of such notice.

15.5 Advertisement of the notice of meeting:

The notice of the meeting shall be advertised in such newspapers and in such manner as the Tribunal may direct, not less than fourteen clear days before the date fixed for the meeting. The advertisement shall be in Form No. 15.5.

15.6 Copy of compromise or arrangement to be furnished by the company:

Every creditor or member entitled to attend the meeting shall be furnished by the company, free of charge and within one day of a requisition being made for the same, with a copy of the proposed compromise or arrangement together with a copy of the statement required to be furnished under the section 230 of Act, unless the same had been already furnished to such member or creditor.

15.7 Affidavit of service:

The chairperson appointed for the meeting of the company or other person directed to issue the advertisement and the notices of the meeting shall file an affidavit not less than seven days before the date fixed for the holding of the meeting or the holding of the first of the meetings, as the case may be, showing that the directions regarding the issue of notices and the advertisement have been duly complied with. In default thereof, the summons shall be posted before the Tribunal for such orders as he may think fit to make.

15.8 Right to convey consent or objections:

The consent or objections under sub-section (4) of section 230 may be conveyed in writing to the Chairperson of the meeting within a month from the date of the receipt of the notice.

15.9 Result of the meeting to be decided by poll:

The decisions of the meeting or meetings held in pursuance of the order of the Tribunal and the manner as prescribed in section 230 of the Act, on all resolutions shall be ascertained only by taking a poll while considering the representations of such authorities as per sub-section (5) thereof and the consents adopting the arrangement or compromise as received from the eligible persons.

15.10 Report of the result of the meeting:

The chairman of the meeting (or where there are separate meetings, the chairman of each meeting) shall, within the time fixed by the Tribunal, or where no time has been fixed, within seven days after the conclusion of the meeting, report the result thereof to the Tribunal. The report shall state accurately the number of creditors or class of creditors or the number of members or class of members, as the case may be, who were present and who voted at the meeting either in person or by proxy, their individual values and the way they voted. The report shall be in Form No. 15.6.

15.11 Offer of Takeover of a company other than a listed company as a result of compromise or arrangement.

(1) The takeover offer under sub-section (11) of section 230, whether by existing shareholder or not, at a price determined by registered valuer as approved by shareholders:

Provided that where the company, being acquired is regulated under a special Act, approval of the regulatory body constituted or established under that Act as required under such act, shall also be obtained.

Explanation- For the purposes of this rule, ‘takeover’ means :-

a) acquisition of control of a company other than a listed company pursuant to a scheme of compromise or arrangement under section 230; or

b) acquisition of fifty percent or more of the total share capital of a company other than a listed company pursuant to a scheme of compromise or arrangement under section 230.

(2) The person making the takeover offer shall enter into Memorandum of understanding or an Agreement with the shareholders of the company being so acquired and such Memorandum or Agreement for takeover shall be annexed to the notice of the general meeting and shall, inter alia, contain-

(a) Name, address and details of the person making such takeover offer;

(b) shares/ voting rights already held by such person;

(c) proposed date of executing the transaction;

(d) total paid-up share capital of the company being acquired;

(e) total number and percentage of shares/ voting rights proposed to be acquired;

(f) price offered for the purchase of the shares;

(g) mode of payment of consideration (whether in cash or for consideration other than cash)

(h) objects and purpose of the acquisition of the shares;

(i) statement to the effect that the interest of the creditors, secured or unsecured, and of the employees will not be adversely affected by the takeover;

(j) other terms and conditions of the offer.

(3) The takeover shall become effective only when it is approved by the company by passing a special resolution in the general meeting:

Provided that where any term loan is subsisting, prior approval of the concerned bank or public financial institution shall be obtained before passing such special resolution.

(4) The details of the offer, as are mentioned in the Memorandum of Understanding or Agreement for takeover forthwith after sending the notice of the meeting, be:

(a) sent to all the creditors, debenture holders, trustee(s) and deposit holders of the company;

(b) published at least once in English language in a leading English newspaper and in vernacular language in one vernacular newspaper having wide circulation in the State in which the registered office of the company is situate; and

(c) placed on the website of the company, if any.

(5) If such takeover is being made by a listed company, a copy of such offer shall be sent to the Stock Exchanges and be placed on the website of the Company, if any.

(6) Where the shares/ voting rights are to be acquired for consideration other than cash, the valuation of such consideration shall be done by a registered valuer who shall submit a valuation report to the company giving justification for the valuation. The valuation report shall be sent along with the notice of the said general meeting.

(7) The dissenting shareholders of the company being acquired shall be given an exit offer at a price determined by a registered valuer or at a price negotiated by both the parties to such takeover under sub-rule (1), whichever is higher.

(8) Notwithstanding anything, contained in sub-sections (1) to (9) of section 230, shall apply to takeover of an unlisted company if the conditions specified in this rule are complied with.

However, if any shareholder or any other stakeholder has any grievance with respect to such takeover offer, he may file his objections with the Tribunal in accordance with sub-section (12) of section 230.

15.12 Application under sub-section (12) of section 230.

(1) An application under sub-section (12) of section 230 shall be filed by an aggrieved party to the Tribunal in Form No. 15.7 specifying any grievances with respect to the takeover offer of companies other than listed companies and shall be accompanied by such documents as are mentioned therein.

(2) The petitioner shall at least 14 days before the date of hearing advertise the petition in accordance with rule 11 of National Company Law Tribunal Rules, 2013.

(3) Where any objection of any person whose interest is likely to be affected by the proposed petition has been received by the petitioner, it shall serve a copy thereof to the Registrar on or before the date of hearing:

Provided that the Tribunal may, if it thinks fit, permit, at any time even after the final hearing, any person to file objections after giving notice to the petitioner.

(4) Upon the hearing the petition or any adjourned hearing thereof, the Registrar may pass such an order, subject to such terms and conditions, as it thinks fit.

15.13 Petition for confirming compromise or arrangement:

Where the proposed compromise or arrangement is agreed to, with or without modification, as provided by section 231 and 232 with reference to section 230, the company, (or its official liquidator or company liquidator, as the case may be), shall, within seven days of the filing of the report by the chairperson, present a petition to the Tribunal for confirmation of the compromise or arrangement. The petition shall be in Form No. 15.8.

Where a compromise or arrangement is proposed for the purposes of or in connection with scheme for the reconstruction of any company or companies, or for the amalgamation of any two or more companies, the petition shall pray for appropriate orders and directions under section 230 read with 232 of the Act.

Where the company fails to present the petition for confirmation of the Compromise or arrangement as aforesaid, it shall be open to any creditor or contributory, as the case may be, with the leave of the Tribunal, to present the petition and the company shall be liable for the cost thereof.

15.14 Date and notice of hearing:

The Tribunal shall fix a date for the hearing of the petition, and notice of the hearing shall be advertised in the same papers in which the notice of the meeting was advertised, or in such other papers as the Tribunal may direct, not less than 10 days before the date fixed for the hearing. The notice of the hearing of the petition shall also be served by the Tribunal to the representative of the objectors under sub-section (4) of section 230 and to the Central Government and other Authorities who have made representation under sub-section (5) of section 230.

15.15 Order on petition:

Where the Tribunal sanctions the compromise or arrangement, the order shall include such directions in regard to any matter and such modifications in the compromise or arrangement as the Tribunal may think fit to make for the proper working of the compromise or arrangement. The order shall direct that a certified copy of the same shall be filed with the Registrar of Companies within 14 days from the date of the order, or such other time as may be fixed by the Tribunal. The order shall be in Form No. 15.9, with such variations as may be necessary.

15.16 Application for directions under section 232:

Where the compromise or arrangement has been proposed for the purposes of or in connection with a scheme for the reconstruction of any company or companies or the amalgamation of any two or more companies, and the matters involved cannot be dealt with or dealt with adequately on the petition for sanction of the compromise or arrangement, an application shall be made to the Tribunal under section 232 or section 230, by a notice of admission supported by an application for directions of the Tribunal as to the proceedings to be taken. Notice of the summons shall be given in such manner and to such persons as the Tribunal may direct.

15.17 Directions at hearing of application:

Upon the hearing of the summons or upon any adjourned hearing thereof, the Tribunal may make such order or give such directions as it may think fit, as to the proceedings to be taken for the purpose of reconstruction or amalgamation, as the case may be, including, where necessary, an inquiry as to the creditors of the transferor company and the securing of the debts and claims of any of the dissenting creditors in such manner as to the Tribunal may think just.

15.18 Order under section 232:

An order made under section 232 read with section 230 shall be in Form No. 15.10 with such variation as the circumstances may require.

15.19 Compromise or arrangement involving reduction of share capital:

Where a proposed compromise or arrangement involves a reduction of capital of the company, the procedure and requirements if any specifically prescribed by the Act and these rules relating to the reduction of share capital, shall be complied with, before the compromise or arrangement so far as it relates to reduction of share capital, is sanctioned.

15.20 Statement of compliance in mergers and amalgamations

For the purposes of sub-section (7) of section 232, every company in relation to which an order is made under sub-section (3) of section 232 shall until the completion of the scheme, file with the Registrar the statement in Form No. 15.11 along with such fee as provided in Annexure ‘B’ within 30 days from the end of each financial year.

15.21 Report on working of compromise or arrangement:

At any time after the passing of the order sanctioning the compromise or arrangement, the Tribunal may, either on its own motion or on the application of any person interested, make an order directing the company, or, where the company is being wound-up, the liquidator or the Company Liquidator, to submit to the Tribunal within such time as the Tribunal may, fix, a report on the working of the said compromise or arrangement. On consideration of the report, the Tribunal may pass such orders or give such directions as it may think fit.

15.22 Liberty of the Tribunal:

At any time, if the Tribunal hearing the petition or application is of the opinion that the petition or application or evidence or information or statement is required to be filed in the form of Affidavit, the same may be ordered by the Tribunal in the manner as the Tribunal may think fit. The Tribunal may pass any direction(s) or order or dispense with any procedure prescribed by these rules in pursuance of the object of the provisions for implementation of the scheme of arrangement or compromise or restructuring or otherwise practicably. The Tribunal hearing the petition or application is at liberty to pass order staying the commencement of any suit or proceeding against the company under this Chapter of the Act, or under this part of the rules on a petition or an application filed by the applicant for implementation of the Scheme of arrangement or compromise or restructure or otherwise practicably.

15.23 Liberty to apply

(1) The company, or any creditor or member thereof, or in case of a company which is being wound-up, the liquidator, may, at any time after the passing of the order sanctioning the compromise or arrangement, apply to the Tribunal for the determination of any question relating to the working of the compromise or arrangement.

(2) The application shall in the first instance be posted before the Tribunal for directions as to the notices and the advertisement, if any, to be issued, as the Tribunal may direct.

(3) The Tribunal may, on such application, pass such orders and give such directions as it may think fit in regard to the matter, and may make such modifications in the compromise or arrangement as it may consider necessary for the proper working thereof, or pass such orders as it may think fit in the circumstances of the case.

15.24 Applicability of Rules to the Amalgamation of Sick Company

The Tribunal may order for amalgamation of a company with any other company on a joint petition or application made by one or more of the creditors or contributories or both of both the companies subject to such terms and conditions as may be imposed by the Tribunal if the Tribunal is satisfied that such amalgamation is economically and strategically viable for the amalgamated company and such resultant company will remain financially sound even after such amalgamation. While ordering so, the Tribunal may approve any scheme of restructuring of the loans after securing no objection from the respective creditors. The rules relating to amalgamation shall also be applicable to this kind of amalgamations.

15.25 Compromise or arrangement including Merger of certain companies.

(1) For the purposes of sub-section (1) of section 233, a company shall be deemed to be "wholly owned subsidiary" only if hundred per cent of share capital is held by the holding company except the shares held by the nominee or nominees to ensure that the number of members of subsidiary company is not reduced below the statutory limit as provided in section 187.

(2) For the purposes of clause (c) of sub-section (1) of section 233, the declaration of solvency shall be filed by the each of the companies involved in a scheme of compromise or arrangement involving merger in Form No. 15.12 along with such fee as provided in Annexure ‘B ‘before convening the meeting of members and creditors for approval of the scheme.

(3) For the purposes of clause (b) and (d) of sub-section (1) of section 233, the notice of the meeting to the members and creditors shall be accompanied by

(a) a statement, as far as applicable, referred to in sub-section (3) of section 230;

(b) the declaration of solvency made in pursuance of clause (c) of sub-section (1) of section 233;

(c) a copy of the scheme.

(4)(a) For the purposes of sub-section (2) of section 233, the transferee company shall, within seven days after the conclusion of the meeting(s) of members or class of members or creditors or class of creditors, file in Form No. 15.13 a copy of the scheme as approved by the members and creditors, along with report of the result of each of the meetings with the Central Government, Registrar of Companies and the Official Liquidator, of the place where the registered office of the company is situated.

(b) Copy of the scheme shall be filed with the Registrar of Companies along with the fee as provided in Annexure ‘B’ through the MCA e-filing system.

(c) Copy of the scheme shall be filed with the Central Government and Official Liquidator, by sending them through hand delivery or registered or speed post or through electronic filing system as may be approved by the Central Government.

(5) Where no objection or comment is received to the scheme from the Registrar and Official Liquidator or where even after the receipt of objections or comments of Registrar and Official Liquidator, the Central Government is of the opinion that the scheme is in the public interest or in the interest of creditors the Central Government shall issue in Form No. 15.14, a confirmation order of such scheme of compromise, or arrangement.

(6) Where objections are received from the Registrar or Official Liquidator and the Central Government is of the opinion, whether on the basis of such objections or otherwise, that the scheme is not in the public interest or in interest of creditors, it may file an application before the Tribunal within sixty days of the receipt of the scheme stating its objections or opinion and requesting that Tribunal may consider the scheme under section 232.

(7) For the purposes of sub-section (7) of section 233, the confirmation order of the scheme issued by the Central Government or Tribunal, shall be filed in Form No. 15.15 along with the fee as provided in Annexure ‘B’ with the Registrars having jurisdiction over the transferee and transferor companies respectively.

15.26 Fees to be paid on revised capital.

For the purposes of sub-section (11) of section 233, the transferee company shall pay such fees as may be specified in Annexure ‘B’ on the revised capital.

15.27 Notice to dissenting shareholders for acquiring the shares.

For the purposes of sub-section (1) of section 235, the transferee company shall send a notice in Form No. 15.16 to the dissenting shareholder(s) of the transferor company, at the last intimated address of such shareholder, for acquiring the shares of such dissenting shareholders.

15.28 Determination of price for purchase of minority shareholding.

For the purposes of sub-section (2) of section 236, the registered valuer shall determine the price (hereinafter called as offer price) to be paid by the acquirer, person or group of persons referred to in sub-section (1) of section 236 for purchase of equity shares of the minority shareholders of the company, in accordance with the following rules:-

(1) In the case of a listed company,

(i) the offer price shall be determined in the manner as may be specified by the Securities and Exchange Board by making regulations in this behalf; and

(ii) the registered valuer shall also provide a proper valuation report/basis of valuation addressed to the Board of directors of the company giving justification for such valuation

2. In the case of an unlisted company and a private company,

(i) the offer price shall be determined after taking into account the following factors:-

(a) the highest price paid by the acquirer, person or group of persons for acquisition during last twelve months;

(b) the fair price of shares of the company to be determined by the registered valuer after taking into account valuation parameters including return on net worth, book value of shares, earning per share, price earning multiple vis-à-vis the industry average, and such other parameters as are customary for valuation of shares of such companies; and (ii) the registered valuer shall also provide a proper valuation report/basis of valuation addressed to the Board of directors of the company giving justification for such valuation.

15.29 Power of Central Government to provide for amalgamation of companies in public interest.

1. For the purposes of sub-section (3) of section 237, the Central Government may nominate an officer ………………………………… in the Ministry of Corporate Affairs.

2. For the purposes of sub-section (3) of section 237, the compensation to be paid to the member or creditor, including a debenture holder, of each of the transferor companies shall be assessed by an officer not below the rank of Junior Administrative Grade of Indian Corporate Law Services in the Ministry of Corporate Affairs or such other authority as may be notified by the Central Government.

15.30 Circular containing scheme of amalgamation or merger.

For the purposes of clause (a) of sub-section (1) of section 238, every circular containing the offer of scheme or contract involving transfer of shares or any class of shares and recommendation to the members of the transferor company by its directors to accept such offer, shall be accompanied by such information as set out in Form No. 15.17.

15.31 Compromise or arrangement includes `demerger’

(1) For the purpose of Chapter XV of the Act, `demerger’ in relation to companies means transfer, pursuant to scheme of arrangement by a ‘demerged company’ of its one or more undertakings to any ‘resulting company’ in such a manner as provided in section 2(19AA) of the Income Tax Act, 1961, subject to fulfilling the conditions stipulated in section 2(19AA) of the Income Tax Act and shares have been allotted by the ‘resulting company’ to the share holders of the .demerged company’ against the transfer of assets and liabilities.

(2)For the purpose of the compromise in the nature of ‘demerger’ till the Accounting Standards is prescribed for the purpose of ‘demerger’, the Accounting Treatment shall be in accordance with the conditions stipulated in section 2(19AA) of the Income Tax Act, 1961 and

(i) in the books of the ‘demerged company’:-

(a)Assets and liabilities shall be transferred at the same value appearing in the books, without considering any revaluation or writing off of assets carried out during the preceding two financial years; and

(b)The difference between the value of assets and liabilities shall be credited to capital reserve or debited to good will.

(ii)In the books of ‘resulting company’:-

(a)Assets and liabilities of ‘demerged company’ transferred shall be recorded at the same value appearing in the books of the ‘demerged company’ without considering any revaluation or writing off of assets carried out during the preceding two financial years;

(b)Shares issued shall be credited to the share capital account; and

(c)The excess or deficit, if any, remaining after recording the aforesaid entries shall be credited to capital reserve or debited to good will as the case may be.

Provided that a certificate from a Chartered Accountant is submitted to the Tribunal to the effect that both ‘demerged company’ and ‘resulting company’ have complied with conditions as above and accounting treatment prescribed in this rule

15.32 Fee. – (1) Every memorandum of appeal shall be accompanied with a fee provided in sub-rule (2) and such fee may be remitted in the form of demand draft drawn in favour of Pay and Accounts Officer, Ministry of Corporate Affairs, payable at New Delhi.

(2) The amount of fee payable in respect of every appeal made to the Appellate Tribunal against the order of the Tribunal shall be rupees ten thousand only.

(3) The Tribunal may, to advance the cause of justice and in suitable cases, waive payment of fee or portion thereof, taking into consideration the economic condition or indigent circumstances of the petitioner or appellant or applicant or such other reason, as the case may be, by an order for reasons to be recorded.

(4) The Central Government may review the fee under rule 4 after every three years and the fee may be amended by a notification.

15.33 – Save as otherwise provided in these rules, National Company Law Tribunal Rules, 2013, shall apply to the circumstances in which these rules do not specifically provide or elaborate in relation to any matter.

DRAFT RULES UNDER COMPANIES ACT, 2013

CHAPTER XVII

REGISTERED VALUERS

Definition

17.1 ‘Registered Valuer’ means a person registered as a Valuer under Chapter XVII of the Act.

Registration as Valuers.

17.2 (1) For the purposes of sub-section (1) of section 247, the Central Government or any authority, institution or agency, as may be notified by the Central Government, shall maintain a register to be called as the Register of Valuers in which there shall be registered the names, address and other details of the persons registered as valuers in pursuance of section 247.

(2) The following persons shall be eligible to apply for being registered as a valuer:

(a) a chartered accountant, company secretary or cost accountant who is in whole-time practice, or any person holding equivalent Indian or foreign qualification as the Ministry of Corporate Affairs may recognise by an order;

Provided that such foreign qualification acquired by Indian citizen.

(b) a Merchant Banker registered with the Securities and Exchange Board of India, and who has in his employment person(s) having qualifications prescribed under (a) above to carry out valuation by such qualified persons;

(c) member of the Institute of Engineers and who is in whole-time practice;

(d) member of the Institute of Architects and who is in whole-time practice;

(e) A person or entity possessing necessary competence and qualification as may be notified by the Central Government from time to time.

Provided that persons referred to in (a), (c) and (d) and qualified person in (b) above shall have not less than five years continuous experience after acquiring membership of respective institutions.

Provided further that in the case of merchant banker the valuation report shall be signed by the qualified person.

Provided also that persons referred to in (a) and (b) shall be in respect of requirement for a “financial valuation” and the persons referred to in (c) and (d) shall be in respect of requirement for a “technical valuation” and a person or a firm or Limited Liability Partnership or merchant banker possessing both the qualifications may act in dual capacity.

Explanation: For the purposes of this rule, a person shall be deemed “to be in whole-time practice”, when individually or in partnership or in limited liability partnership or in merchant banker with other persons in practice who are members of other professional bodies, he, in consideration of remuneration received or to be received:

(i) engages himself in the practice of valuation; or

(ii) offers to perform or performs services involving valuation of any assets with the object of arriving at financial value of the asset being valued; or

(iii) renders professional services or assistance in or about matters of principle or detail relating to valuation.

(3) An application for registration as valuer shall be made in Form No. 17.1 by individuals and firms and Form No. 17.2 by others, along with the fee as provided in Annexure ‘B’.

Furnishing of Particulars in certain cases.

17.3 Where any person who is registered as a valuer under section 247 or who has made an application for registration as a valuer under that section is, at any time thereafter,—

(a) sentenced to a term of imprisonment for any offence; or

(b) found guilty of misconduct in his professional capacity by any association or institute or other body of which he is a member or with which he is registered;

he shall immediately after such conviction or finding, intimate the particulars thereof to the Central Government, institution or agency with which he is registered as a valuer and cease to act as valuer unless permitted by the Central Government, institute or agency with which he is registered as a valuer unless the order imposing penalty/sentence at rule 17.3 (a) and (b) has been stayed by competent authority.

Provided that in case valuer found guilty of professional misconduct or otherwise by the Institute which he is a member or by National Financial Reporting Authority or where the SEBI removed the registration of the merchant banker, such valuer shall cease to be the valuer automatically and their name shall be removed from the register of valuer unless such order has been stayed by the Competent Authority.

Provided further that any ongoing assignment of such valuer, who has ceased to be a valuer, shall be assigned to other valuer from the panel maintained by Central Government or any authority or institution to complete the assignment, if no stay is granted on such appeal, if any.

Removal and restoration of names of valuers from register.

17.4 (1) The Central Government or any authority, institution or agency, may remove by order the name of any person from the register of valuers where it is satisfied, after giving that person a reasonable

opportunity of being heard and after such further inquiry, if any, as it thinks fit,—

(a) that his name has been entered in the register by error or on account of misrepresentation or suppression of a material fact; or

(b) that he has been convicted of any offence and sentenced to a term of imprisonment or has been guilty of misconduct in his professional capacity which, in the opinion of the Central Government or any authority, institution or agency, renders his name unfit to be kept in the register.

(2) The Central Government or any authority, institution or agency, may on application and on sufficient cause being shown and on being satisfied, restore in the register the name of any person removed there from.

(3) Without prejudice to the provisions of sub-rule (1) and (2), the Central Government or any authority, institution or agency, may review the performance of any registered valuer and order removal of the name of any person from the register of valuers where it is satisfied, after giving that person a reasonable opportunity of being heard and after such further inquiry, if any, as it thinks fit to make, that his performance is such that his name should not remain on the register of valuers.

(4) The Central Government or any authority, institution or agency may appoint one or more competent persons as enquiry officer(s) for conducting an enquiry under sub-rule (3) of this rule.

(5) (i) The officer(s) conducting an enquiry shall have the same powers as are vested in a Civil Court under the Code of Civil Procedure, 1908 (5 of 1908) while make an enquiry, in respect of the following matters, namely:

(a) Summoning and enforcing the attendance of any person and examining him on oath;

(b) Requiring the discovery and production of documents;

(c) Receiving evidence on affidavit

(d) Issuing commissions for the examination of witnesses or documents;

(e) Requisitioning under the provisions of Section 123 or 124 of the Indian Evidence Act 1872, any public record or document or copy of such record or document from any office.

(ii) The officer(s) may also call upon such experts from the field of law, economics, business, finance, accountancy, international trade, management, technology or such other discipline as he deems necessary to assist him in conducting the enquiry.

Appeal

17.5 A registered valuer aggrieved by an order passed under rule 17.4 (1) (a) or 17.4 (3) may prefer an appeal in accordance with the procedure laid down in the respective Acts, regulations or bye-laws governing the respective professional. An appeal against the order of the Central Government shall be preferred to the Tribunal.

Methods of valuation.

17.6. For the purposes of clause (c) of sub-section (2) of section 247,

(i) Before adoption of the methods of valuation as detailed below, the registered valuer shall decide the approach to valuation based upon the purpose of valuation:

(a) Asset approach;

(b) Income approach;

(c) Market approach.

(ii) The valuer shall consider the following points while undertaking valuation:

(a)Nature of the business and the History of the Enterprise from its inception;

(b) Economic outlook in general and outlook of the specific industry in particular;

(c) Book value of the stock and the financial condition of the business;

(d) Earning capacity of the company;

(e) Dividend –paying capacity of the company;

(f) Goodwill or other intangible value;

(g) Sales of the stock and the size of the block of stock to be valued;

(h) Market prices of stock of corporations engaged in the same or a similar line of business;

(i) Contingent liabilities or substantial legal issues, within India or abroad, impacting the business;

(j) Nature of instrument proposed to be issued, and nature of transaction contemplated by the parties.

(iii) A registered valuer shall make a valuation of any asset as on valuation date, in accordance with any one or more of the following methods:

(a) Net asset value method representing the value of the business with reference to the asset base of the entity and the attached liabilities on the valuation date (represents the value of an entity’s assets less the value of its liabilities);

(b) Market Price method: Under this method the current price at which the subject of valuation is bought or sold in the market between unrelated third parties is taken into account;

(c) Yield method / Profit Earning Capacity Value (PECV): Under this method the value is calculated by capitalizing the average of the after tax profits for the preceding three years (or such other period. Provided adequate justification is available for choosing another period) at capitalisation rates specified in the report

(d) Discounted Cash Flow Method (DCF): This method expresses the present value of the business as a function of its future cash earnings capacity. This methodology works on the premise that the value of a business is measured in terms of future cash flow streams, discounted to the present time at an appropriate discount rate. The value of the firm is arrived at by estimating the Free Cash Flows (FCF) to Firm and discounting the same with Weighted Average cost of capital (WACC). In case FCF to equity or FCF to debt is used, the appropriate denominator (required return to equity or debt, as the case may be) shall be used.

(e) Comparable Companies Multiples Methodology (CCM): This Method uses the valuation ratios of a publicly traded company and applies that ratio to the company being valued (after applying appropriate discount or premium, as the context may require). The valuation ratio typically expresses the valuation as a function of a measure of financial performance or book value (e.g. total revenue/revenue from operations, EBITDA, EBIT, EPS, operating cash flows, book value or other suitable parameter, with reasons being recorded for choosing each relevant parameter). Multiples used, if not derived from financial statements, can also be based on certain business performance parameters, provided that such valuation is deemed to be more appropriate than valuation based on financial parameters, in the facts of the case (for instance, price/subscriber for an internet portal)

(f) Comparable Transaction Multiples Method (CTM) which entails valuation on the basis of similar transactions among unrelated parties in the peer group companies.

(g) Price of Recent Investment method (PORI) which entails valuation on the basis of recent investment received in the company from an independent investor.

(h) Sum of the parts valuation (SOTP) – where each part of the business is valued according to method(s) appropriate to that business, and the results are summed up to obtain total value of the business

(i) Liquidation value - if the value is being calculated in a liquidation scenario

(j) Weighted Average Method – Under this method the weights are assigned to the values calculated under different valuation approaches.

(k) Any other method accepted or notified by the Reserve Bank of India, Securities and Exchange Board or Income Tax Authorities.

(l) Any other method(s) that the valuer may deem fit to adopt in the given circumstances of the case, provided that adequate justification for use of such method(s) (and not any of the methods above) must be included in the report.

(iv) A registered valuer shall make a valuation of any asset as on valuation date, in accordance with the applicable standards, if any, as may be stipulated for this purpose.

Explanation: For the purposes of this rule, ‘valuation date’ means the date on which the estimate of value is applicable. It may be different from the date of the valuation report or the date on which the investigations were undertaken or completed.

Contents of Valuation Report.

17.7 The report of valuation by a registered valuer shall be as near to and shall contain such information as set out in Form No. 17.3.

 

DRAFT RULES UNDER COMPANIES ACT, 2013

CHAPTER XXI

PART I. – Companies authorized to register under this Act

21.1 (1) For the purposes of sub-section (2) of section 366, the provision of Chapter II relating to name availability and incorporation of a company shall be applicable mutatis mutandis except specifically exempted under section 371.

Provided that there shall be seven or more members who shall apply for availability of name and incorporation.

(2) A company after obtaining availability of name shall attach the documents and information to the Registrar along with Form 21.1. in the following manner:

(i)For registration as a company limited by shares:

(a) A list showing the names, addresses, and occupations of all persons named therein with details of shares held by them (including shares held as cash or other than cash separately) respectively, distinguishing, in cases where the shares are numbered, each share by its number ,who on a day, not being more than six clear days before the day of seeking registration, were partners of the Partnership Firm or Limited Liability Partnership;

(b) A list showing the particulars of persons proposed as the first directors of the company, their names, including surnames or family names, the DIN , residential addresses and their interests in other firms or bodies corporate along with their consent to act as directors of the company;

(c ) An affidavit from each of the persons proposed as the first directors, that he is not disqualified to be a director under sub section (1) of section 164 and that all the documents filed with the Registrar for registration of the company contain information that is correct and complete and true to the best of his knowledge and belief;

(d) A list containing the names and addresses of the Partners of the Partnership Firm or Limited Liability Partnership Firm.

(e) a copy of any Act of Parliament or other Indian law, deed of partnership, Bye laws or other instrument constituting or regulating the company and duly verified in the manner provided in Rule 7;

(f) a statement specifying the following particulars:—

(i) the nominal share capital of the company and the number of shares into which it is divided;

(ii) the number of shares taken and the amount paid on each share;

(iii) the name of the company, with the addition of the word "Limited" or "Private Limited" as the case may require, as the last word or words thereof;

(g) Written consent or No Objection Certificate from all the secured creditors of the applicant.

(h) Written consent from the majority of members whether present in person or by proxy at a general meeting agreeing for registration under this part.

(ii) For registration as a company limited by guarantee or as an unlimited company:

(a) a list showing the names, addresses and occupations of all persons, who on a day, not being more than six clear days before the day of seeking registration, were members of the company with proof of membership;

(b) A list showing the particulars of persons proposed as the first directors of the company, their names, including surnames or family names, the DIN, residential addresses and their interests in other firms or bodies corporate along with their consent to act as directors of the company;

(c) An affidavit from each of the first directors, that he is not disqualified to be a director under sub section (1) of section 164 and that all the documents filed with the Registrar for registration of the company contain information that is correct and complete and true to the best of his knowledge and belief;

(d) A list containing the names and addresses of the Partners of the Partnership Firm or Limited Liability Partnership Firm

(e) a copy of any Act of Parliament or other Indian law, deed of partnership, bye-laws or other instrument constituting or regulating the company duly verified in the manner provided in Rule 7;

(f) in the case of a company intended to be registered as a company limited by guarantee, a copy of the resolution declaring the amount of the guarantee.

(3) Statement of accounts of the company, prepared not later than six days preceding the date of seeking registration, certified by the Auditor of the “company” together with the Audited Financial Statements of the previous year, where applicable.

Provided that assets of the ‘company’ shall not be revalued for the purpose of vesting of its assets with the company as incorporated under this Act during immediately preceding one year or surplus out of the revaluation shall not be credited to the capital account.

(4) A certificate from a Company Secretary in Practice or Chartered Accountant or Cost Accountant certifying that the entity applying for registration under this Part has complied with all the provisions of the Stamp Act, to the extent applicable including in vesting of immovable properties.

(5) No objection certificate from the concerned Registrar of Firms or Registrar of Companies(LLP) for conversion into a company under the Companies Act, 2013;

(6) An affidavit, duly notarized, from all the members or partners providing that in the event of registration as a company under Part I of Chapter XXI of the Companies Act, 2013, necessary documents or papers shall be submitted to the registering or other authority with which the company was earlier registered, for its dissolution as partnership firm or limited liability partnership.

(7) The list of members and directors and any other particulars relating to the company required to be delivered to the Registrar shall be duly verified by the declaration of any two or more directors of the company or Designated Partner of the Limited Liability Partnership or two partners of a partnership firm.

21.2 (1) For the purpose of clause (b) of section 374, every company seeking registration under Part I of Chapter XXI shall publish an advertisement about registration under this Part, seeking objections, if any. The said advertisement shall be in Form No. 21.2 and shall be published at least once in a vernacular newspaper in the principal vernacular language of the district in which the registered office of the proposed company is to be situated, and circulating in that district, and at least once in English language in an English newspaper circulating in that district;

(2) A copy of the notice, as published, shall be attached with Form 21.1. .

(3) The Registrar shall, after considering the application and the objections, if any, received by him within thirty days from the date of publication of notice, and after ensuring that the company has addressed the objections suitably decide whether the Registration should or should not be granted.

(4) If the Registrar decides that the applicant should be registered, he shall issue a certificate of incorporation in Form 2.12.

21.3 For the purpose of section 374(d), where a partnership firm or Limited Liability Partnership has obtained a certificate of registration under section 367, an intimation to this effect shall be given, within fifteen days of such registration, to the concerned Registrar of Firms or Registrar of Companies(LLP) under which it was originally registered, as the case may be, along with necessary documents or papers for its dissolution as partnership firm or limited liability partnership

 

DRAFT RULES UNDER THE COMPANIES ACT, 2013

Chapter XXVIII:

(Rules in respect of Clause 442: MEDIATION AND CONCILIATION PANEL)

28.1. Panel of mediators/conciliators.

(a) For the purposes of sub-section (1) of section 442 of the Act, any body, institute or association which has been authorized in this behalf by the Central Government shall prepare a panel of experts (to be called as Mediation and Conciliation Panel) willing and eligible to be appointed as mediators/conciliators and such Mediation and Conciliation Panel shall be placed on the website of Ministry of Corporate Affairs or any other website as may be notified by the Central Government.

(b) Any person who intends to get empanelled as mediator/conciliator possessing the requisite qualifications shall make an application addressed to the body, institute or association notified by the Central Government in Form No. 28.1. Such body, institute or association shall carry out due diligence before including the name of any person on the Mediation and Conciliation Panel. The body, institute or association may lay down regulations with the approval of the Central Government for considering the name of a person for inclusion in the Mediation and Conciliation Panel and for the purpose charge entrance and annual fee as may be determined by it.

28.2. Qualifications of persons to be empanelled as experts under Rule 28.1.

The following persons may be enlisted as experts in the panel of mediators/conciliators under Rule 28.1, namely:

(a) Retired Judges of the Supreme Court of India;

(b) Retired Judges of the High Courts;

(c) Retired District & Sessions Judges;

(d) Retired Members or Registrar of National Tribunal constituted under any law for the time being in force;

(e) Retired Indian Corporate Law Service Officers or Indian Legal Service Officers with the equivalent pay scale of Joint Secretary to the Government of India or more

(f) Advocates with at least fifteen years standing at any Bar Council;

(g) Professionals with at least fifteen years of continuous practice as Chartered Accountant or Cost Accountant or Company Secretary;

(h) Retired Members and Presidents of State Consumer Forums; and

(i) Persons who are experts in mediation/conciliation to be decided by the Central Government from time to time.

28.3. Disqualifications of persons.

(1) The following persons shall be deemed to be disqualified for being empanelled as mediators/conciliators:

(a) any person who is an undischarged insolvent or has applied to be adjudicated as an insolvent and his application is pending;

(b) any person:

(i) against whom criminal charges involving moral turpitude are framed by a court and are pending; or

(ii) who has been convicted by a criminal court or any other court for any offence involving moral turpitude.

(c) any person against whom disciplinary proceedings have been initiated by the appropriate disciplinary authority which have resulted in a punishment.

(2) The following persons shall be deemed to be disqualified for being appointed as mediators/conciliators:

(a) any person who is interested or connected with the subject-matter of dispute(s) or is related to any one of the parties or to those who represent them; and

(b) any authorised representative who has appeared or is appearing for any of the parties in the suit or in other proceedings(s).

28.4. Deletion from panel.

The body, institute or association may delete any person in the panel of mediators/conciliators by recording reasons in writing and after giving him an opportunity of being heard.

28.5. Preference.

The Central Government, Tribunal or the Appellate Tribunal shall, while nominating any person from the panel of mediators/conciliators referred to in Rule 28.1, consider his suitability for resolving the dispute(s) involved and shall give preference to those who have proven record of successful mediation/conciliation or who have special qualification or experience in the relevant field.

28.6. Duty of mediator/conciliator to disclose certain facts.

(a) When a person is approached in connection with his proposed appointment as mediator/conciliator, he shall disclose any circumstance likely to give rise to a reasonable doubt as to his independence or impartiality.

(b) Every mediator/conciliator shall from the time of his appointment and throughout continuance of the mediation/conciliation proceedings, without delay, disclose to the parties, about the existence of any circumstance referred to in sub-rule (a).

28.7. Withdrawal of appointment.

Upon information furnished by the mediator/conciliator under rule 28.6, or upon any other information received from the parties or other persons, if the Central Government or the Tribunal or the Appellate Tribunal, as the case may be, where the proceeding is pending, or the body, institute or association notified by the Central Government, is satisfied that such information has raised a reasonable doubt as to the mediator/conciliator’s independence or impartiality, it may withdraw the nomination and replace him by another mediator/conciliator.

Provided that the mediator/conciliator may, himself, offer to withdraw from the proceedings and request the relevant authority or parties to appoint another mediator/conciliator.

28.8. Procedure of mediation/conciliation.

For the purposes of sub-section (5) of section 442 of the Act,

(a) The parties may agree on the procedure to be followed by the mediator/conciliator in the conduct of the mediation/conciliation proceedings.

(b) Where the parties do not agree on any particular procedure to be followed by the mediator/conciliator, the mediator/conciliator shall follow the procedure hereinafter mentioned, namely:

(i) he shall fix, in consultation with the parties, a time schedule, the dates and the time of each mediation/conciliation session, where all parties have to be present;

(ii) he shall hold the mediation/conciliation at the place decided by the Central Government, the Tribunal or the Appellate Tribunal or the place where the parties and the mediator/conciliator jointly agree;

(iii) he may conduct joint or separate meetings with the parties;

(iv) each party shall, ten days before a session, provide to the mediator/conciliator a brief memorandum setting forth the issues, which according to it, need to be resolved, and its position in respect to those issues and all information reasonably required for the mediator/conciliator to understand the issue; such memorandum shall also be mutually exchanged between the parties. However, in suitable/appropriate cases, the period of ten days may be curtailed at the discretion of the mediator/conciliator; (v) each party shall furnish to the mediator/conciliator such other information as may be required by him in connection with the issues to be resolved.

(c) Where there is more than one mediator/conciliator, the mediator/conciliator nominated by each party may first concur with the party that agreed to nominate him and thereafter interact with the other mediator/conciliator, with a view to resolve the dispute(s).

28.9. Mediator/conciliator not bound by Indian Evidence Act, 1872 or Code of Civil Procedure, 1908.

The mediator/conciliator shall not be bound by the Code of Civil Procedure, 1908 or the Indian Evidence Act, 1872, but shall be guided by the principles of fairness and justice, having regard to the rights and obligations of the parties, usages of trade, if any, and the circumstances of the dispute(s).

28.10. Representation of parties.

The parties shall ordinarily be present personally or through authorised attorney at the sessions or meetings notified by the mediator/conciliator. However, they may be represented by the counsel with permission of the mediator/conciliator in such sessions or meetings.

The party not residing in India may, with the permission of the mediator/conciliator, be represented by his or her authorised representative at the sessions or meetings.

28.11. Consequences of non-attendance of parties at sessions or meetings on due dates.

If a party fails to attend a session or a meeting notified by the mediator/ conciliator on account of deliberate or willful act, the other party or the mediator/conciliator can apply to the Central Government or the Tribunal or the Appellate Tribunal for issuance of necessary direction in the matter having regard to the facts and circumstances of the case.

28.12. Administrative assistance.

In order to facilitate the conduct of mediation/conciliation proceedings, the parties, or the mediator/conciliator with the consent of the parties, may arrange for administrative assistance by a suitable institution or person.

28.13. Offer of settlement by parties.

(a) Any party to the application may, ‘without prejudice’, offer a settlement to the other party at any stage of the proceedings, with a notice to the mediator/conciliator.

(b) Any party to the application may make a, ‘with prejudice’ offer, to the other party at any stage of the proceedings, with a notice to the mediator/conciliator.

28.14. Role of mediator/conciliator.

The mediator/conciliator shall attempt to facilitate voluntary resolution of the dispute(s) by the parties, and communicate the view of each party to the other, assist them in identifying issues, reducing misunderstandings, clarifying priorities, exploring areas of compromise and generating options in an attempt to resolve the dispute(s), emphasizing that it is the responsibility of the parties to take decision which affect them. He shall not impose any terms of settlement on the parties. However, if both the parties consent, he may impose such terms and conditions on the parties for early settlement of the dispute.

28.15. Parties alone responsible for taking decision.

The parties shall be made to understand that the mediator/conciliator only facilitates in arriving at a decision to resolve dispute(s) and that he will not and cannot impose any settlement nor does the mediator/conciliator give any assurance that the mediation/conciliation will result in a settlement. The mediator/conciliator shall not impose any decision on the parties.

28.16. Time limit for completion of mediation/conciliation.

On the expiry of ninety days from the date fixed for the first appearance of the parties before the mediator/conciliator, the mediation/conciliation shall stand terminated, unless the Central Government or the Tribunal or the Appellate Tribunal, which referred the matter, either suo motu, or upon request by any of the parties, and upon hearing all the parties, is of the view that extension of time is necessary or may be useful; but such extension shall not be beyond a further period of thirty days.

28.17. Parties to act in good faith.

All the parties shall commit to participate in the proceedings in good faith with the intention to settle the dispute (s), if possible.

28.18. Confidentiality, disclosure and inadmissibility of information.

(a) When a mediator/conciliator receives factual information concerning the dispute(s) from any party, he shall disclose the substance of that information to the other party, so that the other party may have an opportunity to present such explanation as it may consider appropriate:

Provided that when a party gives information to the mediator/conciliator subject to a specific condition that it be kept confidential, the mediator/conciliator shall not disclose that information to the other party.

(b) Receipt or perusal, or preparation of records, reports or other documents by the mediator/conciliator, while serving in that capacity shall be confidential and the mediator/conciliator shall not be compelled to divulge information regarding those documents nor as to what transpired during the mediation/conciliation before the Central Government orthe Tribunal or the Appellate Tribunal or any other authority or any person or group of persons.

(c) Parties shall maintain confidentiality in respect of events that transpired during the mediation/conciliation and shall not rely on or introduce the said information in other proceedings as to:

(i) views expressed by a party in the course of the mediation/conciliation proceedings;

(ii) documents obtained during the mediation/conciliation which were expressly required to be treated as confidential or other notes, drafts or information given by the parties or the mediator/conciliator;

(iii) proposals made or views expressed by the mediator or conciliator;

(iv) admission made by a party in the course of mediation/conciliation proceedings;

(v) the fact that a party had or had not indicated willingness to accept a proposal.

(d) There shall be no audio or video recording of the mediation/conciliation proceedings.

(e) No statement of parties or the witnesses shall be recorded by the mediator/conciliator.

28.19. Privacy.

The Mediation/conciliation sessions or meetings would be conducted in privacy where the persons as mentioned in Rule 28.1 shall be entitled to represent parties. However, other persons may attend only with the permission of the parties and with the consent of the mediator/conciliator.

28.20. Immunity.

No mediator/conciliator shall be held liable for anything bonafide done or omitted to be done by him during the mediation/conciliation proceedings for civil or criminal action nor shall he be summoned by any party to the suit or proceeding to appear before the Central Government or the Tribunal or the Appellate Tribunal to testify in regard to information received by him or action taken by him or in respect of drafts or records prepared by him or shown to him during the mediation/conciliation proceedings.

28.21. Communication between mediator/conciliator and the Central Government or the Tribunal or the Appellate Tribunal.

(a) In order to preserve the confidence of parties in the Central Government or the Tribunal or the Appellate Tribunal and the neutrality of the mediator/conciliator, there should be no communication between the mediator/conciliator and the Central Government or the Tribunal or the Appellate Tribunal except as stated in sub-rules (b) and (c) of this Rule.

(b) If any communication between the mediator/conciliator and the Central Government or the Tribunal or the Appellate Tribunal is necessary, it shall be in writing and copies of the same shall be given to the parties or the authorised representative.

(c) Communication between the mediator/conciliator and the Central Government or the Tribunal or the Appellate Tribunal shall be limited to communication by the mediator/conciliator:

(i) with the Central Government or the Tribunal or the Appellate Tribunal about the failure of the party to attend;

(ii) with the Central Government or the Tribunal or the Appellate Tribunal about the consent of the parties;

(iii) regarding his assessment that the case is not suited for settlement through the mediation/conciliation;

(iv) that the parties have settled the dispute(s).

28.22. Settlement Agreement.

(a) Where an agreement is reached between the parties in regard to all the issues in the suit or proceeding or some of the issues, the same shall be reduced to writing and signed by the parties. If any counsel has represented the parties, the conciliator/mediator may also obtain his signature on the settlement agreement.

(b) The agreement of the parties so signed shall be submitted to the mediator/conciliator who shall, with a covering letter signed by him, forward the same to the Central Government or the Tribunal or the Appellate Tribunal.

(c) Where no agreement is arrived at between the parties, before the time limit stated in Rule 28.16 or where, the mediator/conciliator is of the view that no settlement is possible, he shall report the same to the Central Government or the Tribunal or the Appellate Tribunal in writing.

28.23. The Central Government or the Tribunal or the Appellate Tribunal to fix a date for recording settlement and passing decree.

(a) The Central Government or the Tribunal or the Appellate Tribunal shall fix a date of hearing normally within fourteen days from the date of receipt of the report of the mediator or conciliator under rule 28.22. On such date of hearing, if the Central Government or the Tribunal or the Appellate Tribunal is satisfied that the parties have settled their dispute(s), it shall pass a decree in accordance with terms thereof.

(b) If the settlement dispose of only certain issues arising in the suit or proceeding, on the basis of which any decree is passed as stated in sub-rule (a), the Central Government or the Tribunal or the Appellate Tribunal shall proceed further to decide remaining issues.

28.24. Fee of mediator/conciliator and costs.

(a) At the time of referring the dispute(s) to the mediation/conciliation, the Central Government or the Tribunal or the Appellate Tribunal may, fix the fee of the mediator/conciliator.

(b) As far as possible, a consolidated sum may be fixed rather than for each session or meeting.

(c) Where the Tribunal has nominated or appointed mediators or conciliators under sub-rule (b) of Rule 28.1, the Tribunal shall fix the fee payable to the mediators/conciliators, which shall be shared equally by the two sets of parties.

(d) The expense of the mediation/conciliation including the fee of the mediator/conciliator, costs of administrative assistance, and other ancillary expenses concerned, shall be borne equally by the various contesting parties or as may be otherwise directed by the Tribunal.

(e) Each party shall bear the costs for production of witnesses on his side including experts, or for production of documents.

(f) The mediator/conciliator may, before the commencement of the mediation/conciliation, direct the parties to deposit equal sums, 100% of the probable costs of the mediation/conciliation.

(g) If any party or parties do not pay the amount referred to sub-rule (f), the Central Government, the Tribunal or the Appellate Tribunal, shall, on the application of the mediator/conciliator, or any party, issue appropriate directions to the concerned parties.

(h) If the expense of the mediation/conciliation including fee, is not paid by the parties, the Central Government, the Tribunal or the Appellate Tribunal, shall, on the application of the mediator/conciliator or the parties, direct the concerned parties to pay, and if they do not pay, the Tribunal shall recover the said amounts as if there was a decree for the said amount.

28.25. Ethics to be followed by mediator/conciliator.

The mediator/conciliator shall:

(a) follow and observe these Rules strictly and with due diligence;

(b) not carry on any activity or conduct which could reasonably be considered as conduct unbecoming of a mediator/conciliator;

(c) uphold the integrity and fairness of the mediation/conciliation process;

(d) ensure that the parties involved in the mediation/conciliation are fairly informed and have an adequate understanding of the procedural aspects of the process;

(e) satisfy himself/herself that he/she is qualified to undertake and complete the assignment in a professional manner;

(f) disclose any interest or relationship likely to affect impartiality or which might seek an appearance of partiality or bias;

(g) avoid, while communicating with the parties, any impropriety or appearance of impropriety;

(h) be faithful to the relationship of trust and confidentiality imposed in the office of mediator/conciliator;

(i) conduct all proceedings related to the resolutions of a dispute, in accordance with the applicable law;

(j) recognize that the mediation/conciliation is based on principles of self-determination by the parties and that the mediation/conciliation process relies upon the ability of parties to reach a voluntary, undisclosed agreement;

(k) maintain the reasonable expectations of the parties as to confidentiality and refrain from promises or guarantees of results.

28.26. Transitory provisions.

Until a panel of Mediators/Conciliators is prepared by the Central Government or body, institute or association as stated in Rule 28.1, the Central Government or the Tribunal or the Appellate Tribunal may nominate a mediator/conciliator of its choice, if the mediator/conciliator belongs to the various classes of persons referred to in Rule 28.2 and is duly qualified and is not disqualified, taking into account the suitability of the mediator/ conciliator.

DRAFT RULES UNDER COMPANIES ACT, 2013

National Company Law Appellate Tribunal Rules, 2013.

MINISTRY OF CORPORATE AFFAIRS

NOTIFICATION

New Delhi, Dated ……….

G.S.R. No.…………..— In exercise of the powers conferred by section 469 read with section 410 and 421 of the Companies Act, 2013 (18 of 2013), the Central Government hereby makes the following rules, namely:-

1. Short title and commencement. –

(1) These rules may be called the National Company Law Appellate Tribunal Rules, 2013.

(2) They shall come into force on the date of their publication in the Official Gazette.

(3) These rules shall also be applicable for the proceedings before the Appellate Tribunal in case of limited liability partnerships under LLP Act, 2008 or rules made thereunder and in case of any inconsistency between rules made under the LLP Act, 2008 and these rules, these rules shall apply.

2. Definitions –

(1) In these rules, unless the context otherwise requires,

(a) ‘Act’ means the Companies Act, 2013 (18 of 2013);

(b) ‘Appeal’ means an appeal preferred under sub-section (1) of section 421 of the Act;

(c) ‘Appellate Tribunal’ means the National Company Law Appellate Tribunal constituted under section 410 of the Act;

(d)”‘Appendix” means Appendix to these rules.

(e)”Authorized Representative" means a person authorized in writing by a party to present his case before the Appellate Tribunal as provided under section 432 of the Act;

(f) ‘Chairperson’ means the Chairperson of the Appellate Tribunal appointed under section 410 of the Act;

(g) ‘Form’ means the form specified in the Appendix ‘A’ to these Rules;

(h) ‘Member’ means the Member, whether Judicial or Technical of the Appellate Tribunal appointed under section 410 of the Act;

(i) ‘Party’ means a person who prefers an appeal before the Appellate Tribunal and includes respondent(s) and any person interested in the appeal;

(j) ‘Registrar’ means the Registrar of the Appellate Tribunal and includes an officer of such Appellate Tribunal who is authorized by the Chairperson to function as Registrar;

(k) ‘Registry’ means the Registry of the Appellate Tribunal;

(l) ‘Tribunal’ means the National Company Law Tribunal constituted under section 408 of the Act and includes its Benches;

(2) All other words and expressions used but not defined in these rules but defined in the Companies Act, 2013 (18 of 2013) shall have the same meaning assigned to them in that Act.

3. Limitation for filing appeal –

(1) Every appeal shall be filed within a period of forty-five days from the date for which a copy of the order of the Tribunal is made available to the person aggrieved.

Provided that the Appellate Tribunal may entertain an appeal after the expiry of the said period of forty-five days from the date aforesaid, but within a further period not exceeding forty-five days, if it is satisfied that the appellant was prevented by sufficient cause from filing the appeal within that period.

4. Procedure of filing Appeal –

(1) A memorandum of appeal shall be presented in the Registry or shall be sent by registered post addressed to Registrar of the Appellate Tribunal within whose jurisdiction his case falls in the Form prescribed in Appendix ‘A’ to these rules.

(2) A memorandum of appeal sent by post shall be deemed to have been presented on the day it was received in the registry.

(3) Every Memorandum of Appeal shall be in three sets in a paper book and shall be accompanied with the certified copy of the order against which the appeal is preferred. In the event, the order appealed against is not filed, the Memorandum of Appeal shall be contain the reasons therefor.

(4) Where a party is represented by an authorized representative, authorization to act as the authorized representative and the written consent thereto by such authorized representative in original, shall be appended to memorandum of the appeal.

(5) Every memorandum of appeal presented to the Appellate Tribunal shall be in English or in Hindi and shall be legibly type written, or printed in double spacing on one side of standard petition paper with an inner margin of about four centimeters width on top and with a right margin of 2.5 cm, and left margin of 5 cm, duly paginated, indexed and stitched together in paper book form.

(6) No Appeal, reference, application, representation, document or other matters contained in any language other than English or Hindi shall be accepted by the Registry, unless the same is accompanied by a true coy of translation thereof in English or Hindi.

5. Language of Appellate Tribunal –

(1) Proceedings of the Appellate Tribunal shall be conducted in English or Hindi.

(2) All orders and judgments of Appellate Tribunal may be either in English or Hindi.

6. Presentation and Scrutiny of Memorandum of Appeal –

(1)The Registrar, or the officer authorized by him, shall endorse on every appeal, the date on which it is presented or received through post under Rule 4 and shall sign the endorsement.

(2) If, on scrutiny, the appeal is found to be in order, it shall be duly registered and given a serial number;

(3) If the appeal, on scrutiny, is found to be defective, the Registrar may return the appeal for removal of defects within 7 days from the date of receipt of intimation;

(4) If the appellant fails to rectify the defect within the time allowed under sub-rule (3), the Registrar may, by order and for reasons to be recorded in writing, decline to register the appeal and inform the appellant accordingly within seven days thereof.

(5) An appeal against the order passed under sub-rule (4) may be preferred by the person aggrieved within fifteen days from the date of such order to the Chairperson or any Member to whom the power is vested and such appeal shall be dealt with and disposed of in Chamber by the Chairperson or such Member whose decision thereon shall be final.

7. Registrar to Place Appeal before Appellate Tribunal for Hearing

The Registrar shall place the appeal before the Appellate Tribunal, as soon as it is registered, for hearing.

8. Summary dismissal of Appeal:

The Appellate Tribunal, after considering the appeal, may summarily dismiss the same, for reasons to be recorded, if the Appellate Tribunal is of opinion that there are not sufficient grounds for proceeding therewith.

9. Filing of Process Fee

Upon direction of the Appellate Tribunal to issue notice, the party shall file Process Fee for service of notice of Appeal or Application, as the case may be.

10. Endorsing copy of appeal to the respondents

A copy of the memorandum of appeal and the paper book shall be served on each of the respondents, as directed by the Appellate Tribunal, by the Registrar by registered post.

11. Filing of reply to the appeal and other documents by the respondents

1) The respondent may file three complete sets containing the reply, if so directed by the Appellate Tribunal. to the appeal along with documents in a paper book form with the registry within one month of the service of the notice on him.

2) The respondent shall also serve one copy of the reply to the appeal along with documents as mentioned in sub-rule (1) to the appellant and shall file proof of service in the Registry.

3) The Appellate Tribunal may, in its discretion on application by the respondent, allow the filing of reply referred to in sub-rule (1), after the expiry of the period referred to therein.

12. Order to be signed and dated

1) Every order of the Appellate Tribunal shall be in writing and shall be signed and dated by the Chairperson and Member (s) of the Appellate Tribunal.

2) The order shall be pronounced in open court.

13. Publication of orders

The orders of the Appellate Tribunal as are deemed fit for publication in any authoritative report or the press may be released for such publication on such terms and conditions as the Appellate Tribunal may lay down.

14. Communication of orders:

Every order passed on an appeal shall be made available to the appellant and to the respondent and to the Tribunal concerned either in person or by registered post free of cost.

15. Power to Regulate the Procedure:

In exercise of the powers conferred on it in sub section (1) of Section 424 of the Act, the Appellate Tribunal may regulate its own procedure for the purpose of discharging its functions under the Act.

16. Costs:

The Appellate Tribunal may, in its discretion, pass such order (s) in respect of costs incidental to any proceedings before it, as it may deem fit or impose such costs on either of the parties for the proceedings on frivolous appeals or if any opinion of Appellate Tribunal, any party to the proceedings is delaying or has delayed, without sufficient cause, the proceedings of the Appellate Tribunal.

17. Certified copy of the order and inspection of record-

(1) If the Appellant or the respondent to any proceeding requires a copy of any order passed by the Appellate Tribunal, the same shall be supplied to him on payment of fees as specified in Appendix –B within four working days from the receipt of application for the said purpose and on urgent basis within two working days from the receipt of application for the said purpose on payment of further fee as specified in Appendix-B.

(2) The parties to the case or their authorized representative may be allowed to inspect the record of the case on making application as prescribed by the Appellate Tribunal in writing to the Registrar and on payment of fee as specified in Appendix –B between 10.30 AM to 3 PM.

18. Working Hours of the Appellant Tribunal:

Except on Saturdays, Sundays and other public holidays, the office of the Appellate Tribunal shall, subject to any order made by the Chairperson, remain open from 09-30 a.m. to 6-00 p.m.

19. Sitting hours of the Appellate Tribunal:

The sitting hours of the Appellate Tribunal shall ordinarily be from 10-30 a.m. to 1-15 p.m. and 2-15 p.m. to 4-30 p.m. or if otherwise subject to any general or special order made by the Chairperson.

20. Inherent powers of the Tribunal:

Nothing in these rules shall be deemed to limit or otherwise affect the inherent powers of the Appellate Tribunal to make such orders as may be necessary for meeting the ends of justice or to prevent abuse of the process of the Appellate Tribunal.

21. Dress for Chairperson and Members and for the Authorised Representatives and for the parties in person:

(1). For Chairperson and Members:

The dress of the Chairperson and members shall be white or striped or black trouser with black coat over white shirt and band or buttoned- up black coat and band. In the case of a female Chairperson or a Member, the dress shall be black coat over a sober coloured saree or any other sober dress and band.

(2). For Authorized Representatives:

Every authorized representative as provided in Section 432 of the Act, of the party shall appear before the Appellate Tribunal in his professional dress if any, and if there is no such dress, a male, in a suit or buttoned–up coat over a trouser or a long buttoned-up coat on dhoti or churidar pyjama, and a female, in a coat over white or any other sober coloured saree or in any other sober dress.

(3 ) For Parties in Person :-

Parties appearing in person before the Appellate Tribunal shall be properly dressed.

22. Memorandum of Appearance:

(1)The Authorized Representatives other than the representative of Central Government or the Regional Director or the Registrar of Companies or the Official Liquidator . shall make an appearance through the filing of Memorandum of Appearance in representing the respective parties to the proceedings. In case of legal practitioner/ advocate, he may make appearance by filing Vakaltanama.

(2) The Central Government or the Regional Director or the Registrar of Companies or the Official Liquidator may be represented by an officer not below the rank of the officer of the senior time scale. The Chartered Accountant in practice or Company Secretary in practice or Cost Accountant in practice shall have post qualification experience of five years.

(3) The Company Liquidator or Administrator shall make his appearance before the Appellate Tribunal in person.

23. Amendment of Order:

Any clerical or arithmetical mistakes in any order of the Appellate Tribunal or error therein arising from any accidental slip or omission may, at any time, be corrected by the Appellate Tribunal on its own motion or on application of any party.

24. Powers to relax. – The Appellate Tribunal shall have power to relax any provision of these rules with respect to any class or category of cases.

25. Salary, Allowances, and other Terms and Conditions of Service of Chairperson and Members:

The Salary, Allowances, and other Terms and Conditions of Service of Chairperson and Members shall be in the manner as may be prescribed by the Central Government in exercise of the powers provided under section 414 of the Act.

26. Powers and functions of the Registrar

(1)The Registrar shall have the custody of the records of the Appellate Tribunal and shall exercise such other functions as are assigned to him under these rules or by the Chairperson by a separate order in writing.

(2) The official seal shall be kept in the custody of the Registrar.

(3) Subject to any general or special direction by the Chairperson, the seal of the Appellate Tribunal shall not be affixed to any order, summons or other process have under the authority in writing from the Registrar.

(4) The seal of the Appellate Tribunal shall not be affixed to any certified copy issued by the Tribunal save under the authority in writing of the Registrar.

27. Additional powers and duties of Registrar

In addition to the powers conferred elsewhere in these rules, the Registrar shall have the following powers and duties subject to any general or special orders of the Chairperson, namely,-

(1) to receive all appeals and other documents;

(2) to decide all questions arising out of the scrutiny of the appeals before they are registered;

(3) to require any appeal presented to the Appellate Tribunal to be amended in accordance with the rules;

(4) subject to the directions of the Chairperson to fix date of hearing of the appeals or other proceeding and issue notices thereof;

(5) direct any formal amendment of records;

(6) to order grant of copies of documents to parties to proceedings;

(7) to grant leave to inspect the record of Appellate Tribunal

(8) dispose of all matters relating to the service of notices or other processes, application for the issue of fresh notice or for extending the time for or ordering a particular method of service on a respondent including a substituted service by publication of the notice by way of advertisements in the newspapers;

(9) to requisition records from the custody of any court or other authority.

28. Powers, Functions and duties of the Secretary of the Appellate Tribunal:

The post of the Secretary shall be at the Appellate Tribunal, New Delhi. He shall discharge his duties, function and exercise his powers under the general superintendence and control of the Chairperson of the Appellate Tribunal. His main function is to co-ordinate with the Tribunal and to act as a liaison officer between the Appellate Tribunal and the concerned Ministry having administrative jurisdiction only over the Appellate Tribunal. He shall

in addition to the work assigned to him by the Chairperson from time to time, have the following functions, duties and powers:

In charge of the long term projects and initiatives of the Appellate Tribunal;

Supervise the divisions and sections of the Human Resources;

Budgetary allocations and Financial Management;

Court operations;

Court facilities and Administrative Services;

Supervise the Public Grievances Mechanism;

Coordinate with the Authorized Representatives and other Professionals;

ICT and Technology facilities;

Communication services;

Public affairs and Public safety provisions in the Appellate Tribunal Premises;

Supervision of Library and Court Research;

Attend and execute such directions given by the Chairperson and discharge such other functions and duties as may be assigned to him.

29. Seal and emblem-

The official seal and the emblem of the Tribunal shall be such as the Central Government may specify.

30. Fee. –

(1) Every memorandum of appeal shall be accompanied with a fee as specified in Appendix-B and such fee may be remitted in the form of demand draft drawn in favour of Pay and Accounts Officer, Ministry of Corporate Affairs, payable at New Delhi.

(2) The Tribunal may, to advance the cause of justice and in suitable cases,

waive payment of fee or portion thereof, taking into consideration the economic condition or indigent circumstances of the petitioner or appellant or applicant or such other reason, as the case may be, by an order for reasons to be recorded.

(3) The Central Government may review the fee after every three years and the fee may be amended by a notification.

31. Application of National Company Law Tribunal Rule 2013 in certain cases:-

Save as otherwise provided in these rules, the Appellate Tribunal may follow the rules of National Company Law Tribunal Rule 2013 in the circumstances in which these rules do not specifically provide or elaborate in relation to any matter.